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.

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.

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.

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.

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.

Hong Kong Patent Attorney

There are professionals in Hong Kong trying to push for certification of patent attorney / patent agent. That will be an important move for intellectual protection in Hong Kong.

Google finally left China

Is there a Google search engine in China? Yes or No?

Here is the story. Rumor has it, about 40 years ago. When Henry Kissinger visited China in the ice-breaking diplomacy, Chinese Premier Zhou Enlai was asked whether there were sex workers in China. Premier Zhou said, "Yes," with a pause, and he continued "in Taiwan". And the whole China admired Zhou's wisdom, as he did not admit that there are sex worker in mainland China, in addition, restate their position that Taiwan is part of China.

Now, any one who asks "Is there a Google search engine in China?"

The answer is "Yes", .... "it is in Hong Kong."

DAB Trademark – Class “25” & “Class 41”

Another Chinese New Year tradition in Hong Kong is, going to the “flower market”!

It usually starts 5 or 6 days before the Chinese New Year, ends on the dawn of the New Year Day. The flower-owners and other stall-owners would usually drop their prices towards the dawn on the last day with a view to get everything sold. They would even destroy the flowers, tangerines etc as “want money don’t want goods” is their collective goal!

There are several flower-markets (Causeway Bay, Mong Kok, Kwun Tong, Tsuen Wan etc) and the biggest one is Victoria Park in Causeway Bay where a few pan-democratic parties would normally make use of this good chance to promote their own political parties.

After the recent “5 District Resignation” which aims at witnessing their belief on “universal suffrage” by Civic Party (“CP”) and League of Social Democrats (“LSD”) (the two political parties in Hong Kong), supporters have different ideas to support such movement. They put forward a sale of their design of tee-shirts (2 different style) of which the profits will go to the funding of this new political campaign in a booth in Victoria Park. In one of the two tee-shirt design, there is a similar trademark (both form and color) of their competitor – Democratic Alliance for the Betterment and Progress of Hong Kong (“DAB”). This particular design is to put a mark that is similar to DAB’s trademark in the left-hand side, then following with a famous Chinese 4-word proverb whereas the last word means “shame” is missing. For the non-Chinese reader, that 4-words are always used together. Thus by quoting only three words, that implies “shameless”.

The idea is to use the DAB registered trademark and slightly modify it to make it looks different for the knowing, or if you really want to find out the different, but looks the same for the lay man. That is, the tee-shirt would implies that DAB is shameless. Subsequently, DAB was offended!

DAB has lodged a complaint as they are of the view that their trademark has been infringed. In the afternoon of 12 February 2010, the last second day of the flower-market, a few officers from Customs and Excise Department went to this booth to collect the unsold tee-shirts with a view to investigate the intellectual property infringement.

The “Trade Mark Record” as obtained from the Trade Marks Registry, Intellectual Property Department, shows that their registration number is 200102834, they registered for it in 1999 with the expiry date on 26 April 2016. They are registered as “Class 41” of which the specification reads: “arranging and conducting exhibitions, conferences, public meetings and group discussions for cultural and educational purposes; arranging and conducting lectures relating to culture and education; publication of books, magazines and printed matters; conducting and arranging conference, exhibitions, public meetings, group discussion and lectures relating to political affairs and elections, and the safeguard and maintenance of social and political stability in Hong Kong; all included in Class 41.”

Unfortunately, they have not registered for “Class 25”! If they do, they would have the exclusive right to use the mark for tee-shirts or other clothing. Without that, it can become a “passing off” case, they may consider to take civil proceedings. Infringement and passing off are different concepts in terms of intellectual protection and the whole case of Customs and Excise Department taking such a high profile action can be an interesting topics in the coming few weeks.

For further information, “Class 1” to “Class 34” are for “goods” while “Class 35” to “Class 45” are for “services”. Details can be found here.

Now it is time for me to make some purchases at the flower-market and check out other infringemnt cases! Well, as I am told that I look like Andy Lau, please do not ask for my autography or taking photos with me if his fans meet me there!

See you soon in the year of Tiger!

“Big Cleaning” with Pomelo-Leaf before Chinese New Year

One of our Chinese New Year traditions is, to clean our bodies and hair with pomelo-leaf (碌柚葉)! The best day to do the cleaning (not only body and hair, also the household furniture and utilities) is usually the 28th day of the last month before Chinese New Year, i.e. 11 Feb 2010 according to the Christian calendar in this year.

It is believed that pomelo-leaf is able to wash away the dirt, to cast away the evil spirits and to get ready for the brand new year!

Incidentally, just the right timing to see a half-page announcement of a “Pomelo Leaf Body Wash” in one of the local newspapers on 10 February which is the last fourth day before Chinese new year!

This half-page announcement mentions about the “Utility Patent” and “Trade Mark” in both China and Hong Kong. They started to apply for the patent in 2003 and successfully got it in 2005.  

While reading between lines, there is a hidden story of the Lee’s family for three generations. This family is given a name as “The King of Pomelo for three generations” (三代柚王) whom claims to conduct research and development on pomelo-leaf for a few decades. They have successfully added a particular element “flavonoids” (類黃酮) which is refined from pomelo-leaf into their product toiletries (including body wash, shampoo and facial wash).

This announcement serves to remind the public that there is only one brand of “pomelo-leaf” as well as to declare that this is now a legal case for any infringement.

Apart from using their specific products, I plan to buy some original pomelo-leaf (usually a few bunches for 10 Hong Kong Dollars) from the market for my body-cleaning tonight! I believe no one from the vegetable stalls will care about the “utility patent”, “trade mark” of the fresh pomelo-leaf.

Hope everyone has a brand new year of Tiger!

P.S. For those who want to check it out, the announced patent is CN03146856.X.

The Hong Kong Innovation-Knowledge Enterprise Award

Congratulations to one of my clients, who is one of the award-winners of the “Innovation-Knowledge Enterprise Award” which is co-organized by the Hong Kong Productivity Council and Guangdong Provincial Intellectual Property Office since 2004.

This award is targeted with a view to increase the Intellectual Property (“IP”) management capability of Hong Kong and mainland enterprises. When the enterprises are facing the arising challenges from the Pearl River Delta region due to the economic upsurge, this award serves as a tool to upgrade them from Original Equipment Manufacturer (OEM) to Original Design Manufacturer (ODM) and Original Brand Manufacturer (OBM).

As it is commonly known, or recognized, that there are tremendous infringement products from the mainland China, this award become more important, meaningful and perhaps sarcastic!

My client is a product development and investment company. The main business is to identify product improvement opportunity and invest in the design, whereby intellectual protection is the major vehicle to protect the return on investment.

My client is involved in inventions related to product improvement and new product design. The areas of improvement include improvisation on functionality, durability, cost in production and maintenance. They have the core design and management team resides in Hong Kong and has a manufacturing facility in Dongguan where a team of draftsmen, testing engineers and production workers helps the design, prototyping, testing and pilot run process. With more than 150 workers, the Dongguan factory also produces products that export to North America, Europe and Middle East.

My client has applied and obtained more than 10 patents for design done before 2006. All of these patents are now commercialized and products being sold or licenses granted to US companies. Since 2006, the group has filed more than 15 patent applications per year in the PRC, United States, and European Community. Currently, they own more than 70 patents or patents pending right in these countries/community. Non-exclusive license rights for about one-third of patents pending are granted to companies which expects to market products using these new invention in their respective countries. Of course, we handle most of their intellectual property related work.

Further information about the Award can be found here:

http://www.hkpc.org/html/eng/award_schemes/award_schemes.jsp#awards6

http://www.itc.gov.hk/

http://www.cedb.gov.hk/about/index.htm

Verdict is out - BT is illegal in Hong Kong

The verdict for the first BT case is out from the Court of Final Appeal, the Chan who used seeds to upload three copyright movies was found guilty and the three months sentence starts immediately. Chan went through the Magistrates Court, Appeal Court and the Court of Final Appeal is Chan's last chance for his case to be heart. It was reported that Chan admitted the act of uploading copyright material in the first caution statement after Customs and Excise Department raided his home. The later hearing was mostly related whether Chan's act was really an act to 'distribute' 'material' to the public.

Since the arrest, there is no other publicized arrest of the same nature in Hong Kong.