2. Intellectual Property: Business Opportunities and Changes for Hong Kong Professionals The Law Society of Hong Kong 香港律師會 Michael Lintern-Smith President, The Law Society of Hong Kong 24 November 2004 1

3. Recent Development CEPA in 2003; CEPA II in August 2004 Preferential market access treatment Pan-PRD Regional Co-operation and Development Barrier-free economic zone 2

4. Market Access Under CEPA – Legal Services Operate in association with Mainland law firms Employed by Mainland law firms Acquire Mainland legal professional qualification Intern & practise on non-litigation legal work in the Mainland Minimum residency requirement waived/ shortened No permit needed for providing assistance on individual cases 3

5. Market Access Under CEPA – Legal Services (2) Comparison of representative offices of Hong Kong law firms before and after the implementation of CEPA No. of Representative Offices of HK Law Firms As at 31/12/2003 As at 3/7/2004 No. of new representative offices after 1/1/2004 Guangdong/ PRD12153 Beijing19 0 Shanghai15161 Others242 Total48546 4

6. Market Access Under CEPA – Trade Mark Agency Services Hong Kong service supplier (HKSS) may conduct trade mark agency business in the Mainland HKSS Certificate: A natural person/ a juridical person Engage in substantive business operation for > 3 years Pay Hong Kong profits tax Maintain business premises in Hong Kong 50% employees are Hong Kong residents 5

7. Market Access Under CEPA – Patent Agency Services Hong Kong permanent residents Chinese citizenship Patent Agent Qualification Certificate Practise patent agencies established with permission in the Mainland Become partners/ shareholders 6

8. Market Access Under CEPA – Patent Agency Services (2) Liberalisation of Patent Services Equal basis as Chinese citizens Expand the list of Mainland recognized universities Training course organized by IPD Allow to write the examination Requirement of Apprenticeship Become partners/ shareholders 7

9. Reality Check Separate professions: Legal Trade Mark Agency Patent Agent Varying opportunities / limitations to access the Mainland market 8

10. Reality Check (2) Market accessibility: partial Justified restrictionOverly restrictive Write qualification examinations Post-qualification employment Discourage HK residents to acquire the qualification 9

11. Reality Check (3) Market of Trade Mark Agency 30,000 trade mark applications/ month 4,000-5,000 existing agents US$225-425 of fee income/ application Yearly income: US$1,350-3,187 Strategies – Profitable business 10

12. Meeting The Challenge CEPA & Pan-PRD Regional Co-operation & Development Big booster to HK economy Market liberalisation: controlled pace Position ourselves to exploit the opportunity How to further the co-operation Maximize the benefits for both sides 11

13. Meeting The Challenge – Continuing the dialogue CEPA Not a one-off agreement Set out framework for consultation Goal: liberalising the Mainland market HK professionals Feed concerns to HKSAR government Exchange ideas (e.g. Forum/ Workshop) Work out practical, achievable suggestion 12

14. Meeting The Challenge – Wider Perspective Free of import tariff Hong Kong products Substantially transformed in Hong Kong >30% of the value is added in HK Encourage foreign companies To set up operations in HK To outsource processes to HK companies More opportunities for HK IP professionals IP elements in R&D/ design Legal aspects of outsourcing & licensing Company formation Tenancy/ Employment 13

15. Meeting The Challenge – Wider Perspective (2) Example I: Chinese language motion pictures Import to the Mainland – quotation free basis Jointly-produced by HK & the Mainland – “ Mainland ” motion pictures Increased business opportunities for IP professionals Joint ventures/ copyrights/ film distribution 14

16. Meeting The Challenge – Wider Perspective (3) Example II: Communications services sector HK service suppliers – set up joint venture enterprises Provide value-added telecommunications services Increased business opportunities for IP professionals Technology transfer/ branding/ co-branding/ licensing/ joint ventures 15

17. Meeting The Challenge – Wider Perspective (4) CEPA – Preferential treatment Over 700 product categories 26 service sectors IP opportunities arise from increased trade Brand is essential in marketing Need for IP protection, enforcement & commercialisation 16

18. Meeting The Challenge – IP Protection Past: Inadequate awareness of IP protection Present: Economy progresses IP becomes a competitive edge Identify products Protect investment Realise profits 17

19. Meeting The Challenge – IP Protection (2) IPD – Raise awareness about IP Law Society – supply speakers at the following seminars organized by the IPD:- DateEventHeld 02/2003Seminar on IP & the Development of SMEsHong Kong 03/2003Seminar on Guangzhou and Hong Kong IP ServicesGuangzhou 06/2003Seminar on IP for Design ProfessionalsHong Kong 09/2003Seminar on IP and the Development of SMEsShenzhen 05/2004Seminar on IP and the Development of SMEsDongguan 11/2004Seminar on IP and the Development of SMEsShaoguan 12/2004Seminar on IP and the Development of SMEsShunde 18

20. Meeting The Challenge – IP Protection (3) Law Society ’ s participation Supported TDC ’ s Roadshows & exhibition 11 trips to Mainland in past 1 year Delegations to Beijing, Shanghai, Chongqing, Guangzhou, Jilin, Tianjin & Zhejiang Held exhibitions on HK legal services More participation in the future 19

21. Meeting The Challenge – Mainland Representative Office More law firms consider establish representative offices in the Mainland Contributing factors CEPA – to associate with Mainland firms Reduction of the requirement of residency 20

22. Meeting The Challenge – Mainland Representative Office (2) Condition to apply to the Ministry of Justice of China for approval Lawful practice in Hong Kong Representative of the office shall be - Practicing lawyer A member of Law Society Practicing >2 yrs outside the Mainland No record of criminal offence/ professional/ misconduct Chief Representative of the office shall be - Practicing >3 yrs outside the Mainland A partner in the law firm Genuine need 21

23. Meeting The Challenge – Collaboration with Mainland Lawyers & Agents Serving Mainland clients through referrals Benefit from closer co-operation with Mainland companies Role of the Law Society Develop contacts with provincial lawyers associations Facilitate exchange of information Develop opportunities for training Example: Jiangsu Lawyers 22

24. Meeting The Challenge – Recruitment and Training Strategies Recruitment Strategy Chinese language ability Science/ engineering background Minimum requirement for establishing a patent agency Partnership: 3 qualified patent agents Company: 5 qualified patent agents Partner/ shareholder: no non-qualified people 23

25. Meeting The Challenge – Recruitment and Training Strategies (2) Training Strategy LL.B / LL.M Programmes provided by universities in the Mainland China Law Seminars organized by the Law Society - Seminar in Shenzhen - Accredited courses on PRC 24

26. Conclusion CEPA & Pan-PRD development – business opportunities IP professionals – understand the new environment Importance of idea exchange Role of the HKSAR Government Role of the Law Society 25