New life, new message

This blog has been inactive for a while. I was busy in working with my clients and friends on new invention, attended an interest course on intellectual property licensing. Mostly on inventions happened in an university. But I think it is also applicable to commercial world. Let me put some thought on write something about what happens lately to put it here.

SIPO posted 2012 financial report

Just read the latest SIPO (State Intellectual Property Office of China) financial report, it is an interesting read.

Last year, SIPO received RMB 3414 million from public funding and RMB 1456 million received as operating income. The operating income includes patent application and examination fees, as well as training, publication and other data services. The expenses that was directly related to Intellectual Property services was RMB 3340 million.

I was trying to check this with the number of patent applications being processed by SIPO, I was not able to obtain the 2012 figure. The 2011 figure shows that SIPO process 526,412 new Patent of Invention application in one year. If we also add Utility Model and Design Patent, the number of new applications processed in 2011 was 1,633,347.

The fees collected for Patent of Invention, Utility Model and Design Patent are different, but just to average out, the average cost to manage and process one patent application is reasonably low.

For example, for a Patent of Invention, the official fee for examination is just RMB2,500 (about USD407), this is a small number when we compare it to EPO's search and examination fee!

The SIPO's financial report was posted here (in Chinese). The latest SIPO statistics was posted here.

I think it is a good news to HKSME which wants to expend their brand name in China. Even HK$500,000 is little money to promote brand name in China. (As our last dairy stated, JDB has spend 12 billion on their brand name building), However, it is also an incentive to HKSME and HK advertisement & PR agents.   

I think if HKSME wants to expend or build up their brand name in China. They need following steps: 

1) Trademark or patent registration in China 

2) To build up the sales channel 

3) To proceed promotional campaign

By the way, HK$500,000 is maximum and support half of the promotional campaign. That means HKSME need to prepare another HK$500,000 or even more for promotional campaign and more fund for operation budget such as building up sales channel, etc. 

There are 2 difficulty for building up brand name in China. One difficulty is to handle the imitators. Another difficulty is to handle large size of map. Actually, Trademark or patent registration in China is 90% successful to protect their brand name. Surely, there are some small imitators may take risk to do the one-time copying. However, at that time, that means the brand name is famous enough. 

Some may misunderstand that patent applications take few days only. Actually, it needs around few years.  

Even size of China Shenzhen region is many times of HK region. Therefore, it is another challenge to a company for how to make promotional campaign to contact their target customers.

Check out details here.

Recently, when I was eating in Chinese restaurant and a waiter gave me a Herbal Tea printed in red and called "加多寶“ (JDB Herbal Tea), it made me curious what was the story behind this red package renamed. Actually, JDB Herbal Tea was called Wong Lo Kat Herbal Tea before. Since in my childhood, it had many advertisements covering all printing and TV advertisement. It was famous in HK in a period then suddenly disappeared in HK supermarkets and convenience stores. However, it has silently covering all restaurants and supermarkets in China. From historical record, the JDB group had purchased the trademark of "Wong Lo Kat" since 1990. Around 20 years, It had over 100 billion revenue in 2008 and it had 150 billions revenue in 2010. The trademark of "Wong Lo Kat" was worth 22 billions in 2006. There were some other similar drink brands from HK to enter China market but they had no such bright result. This legend was ended in 2011 when guang yao group (廣藥集團) had no more authority of this trademark to JDB group. 

We are not commenting from the legal aspect. However, from the economic side, we can find some implications: 

1) Trademark can be cost unbelievable worth or cost nothing. Around 1990, guang yao group (廣藥集團), JDB group and everybody believe "Wong Lo Kat" worth 600K only. However, it is worth 22 billion in 2006. Surely, nobody knows how much it costs after 2020.   

2) JDB Group CEO is smart and brave to buy the trademark of Wong Lo Kat Herbal Tea and promote it to number one drinks in China. However, can he makes another legend by JDB Herbel Tea name? With the old and same equation of Herbal Tea and heavy promotional strategy, some still guess their sales revenue will decrease from 150 billions to 100 billions. There are some critical points to be considered. 

a) JDB Group is still holding the trademark of "Wong Lo Kat" in HK. Even "Wong Lo Kat" faded out in HK market. However, if they keep same name selling in HK market. It makes inland customers confused. The worst situation, when a customer is confused by both name, they will choose the third brand in market. Even the HK market is small, however, it affects those inland customers who always travel between HK and Guang Dong region. 

b)  The sales channel is critical to market share in China. Actually, guang yao group (廣藥集團) has more than thousand medical retail store. Furthermore, it has signed contract with another group for nearly 13K retail selling points in China. That's why they have confidence to collect the trademark of "Wong Lo Kat Herbal Tea" back. With the free rider on strong promotional strategy many years, they only provide enough selling point, then customer will pick them up. Therefore, they spent 7 millions promotional budget only in 2012.

c) The cost of JDB group is heavy when the cost of guang yao group (廣藥集團) is little. Compared to 7 millions promotional budget, JDB group has already spent 12 billions (50% increase compared with last year) to build up their new own brand drink. It does not include other costs such as renew packing, stocks replacing, etc. JDB group has fixed factories for Herbal Tea production while guang yao group (廣藥集團) is contract working with different factories for production. JDB group needs large amount of sales to keep their factory for running. Therefore, they need customers replace JDB Herbal Tea instead of "Wong Lo Kat Herbal Tea shortly. Otherwise, it will make their annul revenue decrease much continuously. 

d) Some believe it is lose-lose situation. When guang yao group (廣藥集團) suddenly diversify its business to drink industry. Actually, guang yao group (廣藥集團) has no production lines but give authority to more than 4 factories for production. It means the quality and taste is a little different. In worst situation, guang yao group (廣藥集團) will make Wong Lo Kat Herbal Tea become no more welcomed by Chinese. and JDB group is also been kicked out from the market. Surely, Guang yao group (廣藥集團) will think it is win-lose situation, Guang yao group (廣藥集團) give up the choice to arise the trademark fee but choose to add this 150 billion side revenue to their 450 billion core business revenue. Compared to JDB group's core business is Herbal Tea, Guang yao group (廣藥集團) still wins in case they get 1% market share only.

The story is totally different in case JDB group keep "Wong Lo Kat" trademark but Guang yao group (廣藥集團) starts their own brand name Herbal Tea. Therefore, we can see the value of trademark is hard to measure.

Related news in Chinese:

news reference 1: http://big5.ce.cn/gate/big5/district.ce.cn/newarea/roll/201207/17/t20120717_23497293.shtml

news reference 2: http://www.singtao.com/yesterday/chi/0821eo02.html

news reference 3: http://big5.jrj.com.cn/gate/big5/finance.jrj.com.cn/industry/2012/09/04031314342020.shtml

history record reference: http://zh.wikipedia.org/zh-hk/王老吉涼茶

1 Oct 2012 was a difficult day for Hong Kong

In a fatal accident, 39 lives were lost. We share our sorrow for lives lost.

If you so wish to paying tribute to those lost, you may go to this site.

APPLE buy more patents for war

I think the great news of patents world in 2012 is APPLE win the lawsuit over SAMSUNG and make it compensation of 10 billion. Even this number cannot be compared with its core business such as iPhone selling. For world famous brand, the winner of lawsuit represents not only the money and the reputation. The result of lawsuit also affects the selling products and the image on customers mind. Therefore, SAMSUNG immediately declare 2nd round of patent war over APPLE once its iPhone support LTE4G. 

It is expected to be 2nd round of patent war soon because APPLE held nothing on LTE4G last year but they hold 318 patent until now. That means, Apple is preparing war and accept the declaration. While SAMSUNG hold 819 patents on LTE4G and lose the 1st round, they must start the war whether for the money or for their image on customer's mind.

News reference (in Chinese).

China trademark "Only if you are interested" 非誠勿擾

Jiangsu Broadcasting Corp was recently sued over a trademark used for one of its most poplar TV shows. Jin Ahuan, an e-business worker, said he registered the trademark 非誠勿擾 - or "only if you are interested" - for matchmaking and marriage services in 2010.

In the same year, Jiangsu TV started a dating game show with the same name, which Jin said infringed his trademark right. But attorneys for the defendant said the two marks "belong to different categories and look different".

As a matter of fact, the movie 非誠勿擾 (translated as If You Are The One in IMDB) was shown in China and all over the world in 2008! The story was about match making that a Chinese man and woman trying to find the right person. So who is infringing whom?

The problem of trademark protection in China

Everybody read about Apple settles iPad trademark case in China with payment of USD60 million to Proview. If you missed this news, you can check this out in New York Times.

This is only a reflection to what is happening in China related to 'well known' foreign trademarks. As we wrote earlier, we are getting cases related to trademark squatting in China. Individual, not a business, registers hundreds of foreign trademarks waiting to sell it. The iPad cases just proved that it can be a good business. Recent cases also demonstrated that posting a registered mark for sales is not a good reason for 'applicant with bad intention', the real trademark owner still have a hard time to fight back. All these combined, actually let the Chinese 'seller' set a higher price to sell the registered marks.

The bad things is, trademark squatting is spreading to Hong Kong. What we can tell is, if you value a name or symbol that your business had been using for a long time, and you have intention to coming to China or Hong Kong, do the mark registration ASAP.

Of course, we do trademark too.

Trademark registrations in China

The latest number of trademarks applications reached 10,000,346 in China as of 29 March 2012. The cumulated number of trademarks granted was 6,892,999.

The annual number of applications reached 1.41 million in the year 2011, a growth of 32% over 2010.

This is a big number, but how many of them are squatters?

Trademark squatting in China

We are surprised by the depth of trademark squatting until we see one.

We came across a case whereby a trademark registered in Australia for the sales of fashion clothing. The lawful owner then applied for registration of the same mark worldwide. But the registration of the mark failed in China, as it was already registered. We were then asked to provide our opinion on the subject.

We search a few Chinese web sites and found that the goods were sold in www.taobao.com (something like eBay) That is, they are being sold on a small scale in China and the manufacturer does not have a presence in China

When the "lawful" owner of this mark wanted to apply it in China, it was rejected as the same mark was registered a few years back. When we were asked to provide opinion on the subject, apart from the normal thing, we also found out that the Chinese trademark owner was an individual instead of a company that also applied another 50 trademarks under the same class 25. Some succeed and some failed.

This person had yet to apply any mark for Chinese products, what an individual with international prospective.

What it takes for his attention to apply for a mark registration? All these marks are national or international brand that have yet to have a presence in China. So that good citizen of China is creating brand awareness before their lawful owner.

We were thinking should we start an anti-squatting action to call each lawful owner to instruct us to get back the trademark from these Chinese squatters. To be or not to be, that is a problem when we have spare resource. Advert time: For those foreign trade mark agent or trade mark owner, you can have us to do some search, may be something interesting may pop up.

Google buys patents from IBM

As far as I know, patents were meant to encourage innovation, but lately they are being used as a weapon.

Google has gained hundreds of patents from IBM as it continues its intellectual property spending spree. It has acquired 188 patents and 29 applications, adding to the 1,000 it purchased from IBM last summer.

The spokesman of Google expressed that acquisition those patents can enhance its patent portfolio and increase its competition in the market, even Android would not been threatened by anti-competitive of Microsoft, Apple and other companies easily.

If you desire your innovation to become stronger, prepare more weapons for it now!!

And here is the news: http://hk.news.yahoo.com/google買ibm專利-025003364.html

Copyright protection as the reason to stop pedestrians from taking pictures

As a headline in a local Chinese newspaper (Apple Daily Hong Kong), Dolce & Gabbana stopped pedestrians from taking pictures of their shop in Canton Road, Kowloon and the explanation offered was 'copyright protection'. According to the newspaper, these pedestrians were walking in the sidewalk about 4 metres away from the shop, and whenever they pointed their camera towards the shop, they were stopped and the staff or the security guard blocked the view of the cameras.

The reporters of the newspaper had further tested out other shops selling luxury goods in the area and only Dolce & Gabbana really watched out for anyone with camera near their shop.

Local lawyers were quoted that display of a shop facing the street are subject to photographic snapshot by pedestrians in public area, such as the sidewalk of Canton Road.

Actually this is a very innovative way to use 'Copyright Protection' and 'Protection of Intellectual Property' to restrict the right of those walking in the sidewalk of a busy street in Hong Kong.

Consultation on Review of the Patent System in Hong Kong

Today is the deadline to submit our opinion on the subject. Here is summary of our response:

1. We do not support the introduction of OGP system in Hong Kong.
2. We strongly support to keep the existing re-registration system. The re-registration system can be further improved by recognizing examination result of US PTO and EPO in addition to existing arrangement.
3. We support to cancel Short-term patents all together in Hong Kong.
4. We support mandatory substantive examination be required before any legal action taken by the short-term patent assignee, should the Short-term patents system is kept in Hong Kong.
5. We have a lot of concern to regulate patent agency service in Hong Kong, with the uncertainty on the outcome of the patent system review, including the introduction of OGP to Hong Kong. We support that no change should be made at this time.

This is the last day of 2011 and we wish everyone have a great year in 2012.

Regulation of Patent Agency Services in Hong Kong

We have discussed a couple of time in the past about regulation of patent agent / patent attorney in Hong Kong. In short, there is no restriction on who can act as an agent for others or carry on the business as a patent agent.


Our firm has staff with legal and science qualification, but there is no specific examination or qualification requirement to provide patent agency service in Hong Kong. The current Review of the Patent System in Hong Kong also touches on this subject. However, it may be difficult to regulate as some firms, like ourself, do a lot of work to help customers to file patent (and trademark for that matter) applications outside Hong Kong. We rely on our associated patent attorney in France to handle our patent work for representation before European Patent Office. We instructed patent attorney in other countries for handle works in their respective countries. For this type of work, would it be regulated in Hong Kong in the future? We are closely monitoring the ongoing consultation on the subject.

Hong Kong Patent System: Substantive Examination

As part of the review of the Patent System in Hong Kong, the examination system for standard patent is part of the system that is being consideration for revamp.


Currently, Hong Kong is using a 'Re-registration system'. Simply put, we don't have patent examiner to examine patent application. A patent that is granted by China or UK patent office can apply for registration in Hong Kong, provided certain procedural steps are followed. For UK patent office, that also applies for applications granted by European Patent Office with UK as one of the designated country.


One way to look at it, any one who have a granted patent in China or UK, the cost to get patent registered in Hong Kong is small. On the other hand, if an inventor intended to seek for protection in Hong Kong only, there was no quick and easy way, the inventor need to first file the same in China or UK. The route is longer and cost more as compared with getting it examined in Hong Kong. And this is the reason why there were suggestion to revamp this system.


As we have pointed out in an earlier blog, there were only 13,000 patent applications per year in Hong Kong. With that size, to keep a broad of examiners to handle various types of patent applications may not be economical. So the consultation paper further suggest to outsource the substantive examination to other examination authority. So it defeats the purpose of training people with the necessary skill to handle patent in Hong Kong.


As an alternative, the current 're-registration system' will go hand-in-hand with 'original grant system', and that will call for different fee structures for different routes. That is, for anyone who seeks for protection outside Hong Kong, and require protection in Hong Kong, would favor the re-registration system so as to save cost. In the unlikely event that an invention that worth only protection in Hong Kong would go for original grant system. Of course, in a case that requires protection in Hong Kong and countries other than China and UK, that may not favor either system. We doubt the popularity as such case, as China and Europe would be major trade partners of Hong Kong.


Further when we look at Europe, they have instituted one examination system, the European Patent Office, as a money saving route to get patent protection in multiple countries. We are of the view that original grant system in Hong Kong is moving in the wrong direction for reducing cost of doing business on a global platform.


It is our view that we don't see the urgency to introduce original grant system and we strongly urge to keep the current re-registration system, so that we still have a choice.

New layout and non-working RSS

We have problem with the RSS, which is not working for awhile, so we were trying to fix it and not successful. While we were trying to fix it, we have changed the layout a bit. Hope you like it.

Short-term patent system in Hong Kong

There is one question in the Review of the Patent System in Hong Kong:
(c) Whether the short-term patent system should be retained as a supplement to standard patents?

Our answer is no. We agree that the short-term patent system be abolished.

Let's look at some background: there are two types of patent in Hong Kong: Standard Patent and Short-term Patent. In short, a Standard Patent is granted in Hong Kong if the same application was granted in either China or UK, assuming certain procedural steps are followed. That is, Hong Kong recognize the granting of patent in UK or China as the necessary requirement in Hong Kong, and there is no examination board here to handle patent application.

In order to get a short-term patent, applicant needs to provide a search report by recognized patent searching authority, further, a short-term patent is limited to one claim per application, with a protection term limited to 8 years (as compared with 20 years for standard patent).

The short-term patent does provide a faster and less costly route to obtain patent protection in Hong Kong. However, as the procedure is different from a standard patent and may lead to abuse. It only encourage inventors with less resources to take this route, however, because of it's limitation, some of these short-terms patent may not be enforceable. In Hong Kong court, normally a short-term patent certificate is not sufficient to prove that novelty and inventiveness of the invention.

We suggest that short-term patent may invite inventor of less resources to seek for IP protection via patent application, but the novelty of such invention is in doubt.

Further, we should look at the current number, in the consultation paper prepared by Hong Kong SAR Government, it shows that in the year 2006-2010, the total number of Standard Patent Applications per year is 13,790, 13,766, 13,662, 11,857 and 11,702 respectively. For Short-term Patent Applications, the number is 520, 599, 488, 551 and 614 respectively. We are talking about less than 5% of the total applications are Short-term Patent.

The discontinuation of short-term patent system would, in theory, reduce the number of applications by 5% max.

The issue is whether such system may encourage inventors to invest more R&D work in Hong Kong, creating inventive works to compete in the global market, etc. Our answer is, we don't know, and we don't know by keeping this system, we will encourage more R&D being done in Hong Kong.

If we are to keep short-term patent, we are of the position that we should not lower criteria for patent granting. It only further invite abuse. We should also consider the requirement that substantive examination should be required before infringement action can be taken (as suggested in 2.11 of the consultation paper).

Number of patent applications per year in Hong Kong

Hong Kong is reviewing its patent system and information disclosed are interesting. In the past 5 years, there were about 13,000 per year. The number actually declines in year 2009 and 2010. Does it reflect the local R&D are reduced in the economic downturn? Luckily we are not affected.

May be because of hard work by Hong Kong Productivity Council, we believe that the number of patent application grant is in the upward trend lately.

A folk innovator of China

Maybe most of us would imagine that only a large corporation could afford to invest in an innovation. Nevertheless, a folk innovator of China displays that our concept is wrong.

He Zengrong, a folk innovator of China, who has paid patent maintenance fee for 9 years, has been granted on five applications since 1998, including two invention patent. As an innovator of enthusiasms, Mr. He brings his own innovations to take part in every ‘’Patent Supermarket’’ in Wuhan(武漢) each month to consult with investors there.

Mr. He believes his invention---Electric mosquito coils terminator. When his daughter had produced a baby in hospital, he had used his Electric mosquito coils to drive the mosquito. He expressed that only using his own Electricmosquito coils could make him to feel at ease. At present, Mr. He’s Electric mosquito coils can bring 20,000 RMB a month for him and he will put that money as capital on his innovation.

"The certification of patent is the proof of success for each innovator." Mr. He said. Without a certification of patent, the corporation might turn down to collaborate because of the high risk and the low market acceptance. In an other word, having a certification of patent can increase an opportunity to cooperate with corporation.

Finally, Mr. He claimed all innovators would also have a common wish that using their innovations contribute to the society. Mr. He, a folk innovator of China told us that enthusiasm and persistence were the most essential elements for innovation. Mr. He is so successful and was single out in a Chinese report by the SIPO.

Hong Kong as Asia's IP Trading Platform

Hong Kong Trade Development Council (HKTDC) and Hong Kong Design Centre (HKDC) organize a one day conference with the title "Hong Kong as Asia's IP Trading Platform" on 2 December 2011. Details of the function can be found here. We have not much involvement in the past in terms of IP trading. We have not made up our mind whether to join or not.

Cost is HKD400 per head including Keynote Luncheon, so it is not expensive by all standard.