New law brings welcome clarity that IP disputes can be arbitrated in Hong Kong, says expert

The new Part 11A of the Arbitration Ordinance (Cap. 609), which took effect on 1 January, has delivered welcome clarification that IP disputes can be arbitrated, and arbitral awards relating to IP enforced, in Hong Kong. The issue was previously the subject of much debate.

The new law was introduced by the Hong Kong government in a bid to cement the city state's reputation as an IP hub and IP dispute resolution centre in Asia.

Why was the amendment necessary?

There was previously debate in Hong Kong over whether IP disputes, and in particular disputes over registered trade marks, patents and designs, could be subject to arbitration. Such IP rights that are registered in Hong Kong are protected by the Trade Marks Ordinance, the Patents Ordinance and the Registered Designs Ordinance, respectively.

Under those Ordinances, the registered owner of an IP right, and any registered licensees and assignees, has certain exclusive, statutory rights to use and enforce the relevant trade mark, patent or design in Hong Kong. On the other hand, if an IP right is not registered, then the statutory rights of protection and enforcement will not arise, although an owner or licensee may still have contractual and/or common law rights of enforcement.

Arbitration is essentially a private dispute resolution procedure and arbitration awards are usually kept confidential between the parties involved and the arbitrator. The concern was that a private, confidential arbitration award relating to ownership or enforcement of IP rights might circumvent existing statutory rights in relation to IP. 

However, with the introduction of the new Part 11A of the Arbitration Ordinance, the Hong Kong government has confirmed that IP disputes can be settled by arbitration.

What to do next

Parties to an IP arbitration should ensure that the resolution of any IP dispute includes an obligation on the appropriate parties to update the relevant statutory IP registers, if necessary. Such updates would ensure that the correct owner, assignee or licensee is duly protected by their statutory IP rights.

The parties should also consider the documents will need to be filed as a result of an arbitration award. In some cases, documents submitted to the Intellectual Property Department may be made available for public inspection, such as a relevant assignment agreement, licence agreement or, potentially, even an arbitration award. As a result, parties should be careful to ensure that the details of the arbitration proceedings themselves remain confidential.

The future of IP arbitrations in Hong Kong

The Department of Justice and the Intellectual Property Department have jointly prepared an information leaflet and a set of 'frequently asked questions' to raise awareness of IP arbitration in Hong Kong.

Pinsent Masons’ research project in conjunction with Queen Mary University of London identified that although arbitration is the most preferred dispute resolution mechanism for businesses in resolving technology, media and telecoms (TMT) disputes, in practice litigation was the most used followed by mediation.

We consider that arbitration is well suited for TMT disputes, including IP disputes, and that the new Part 11A of the Arbitration Ordinance (Cap. 609) may well help to increase the settlement of IP disputes by arbitration in Hong Kong.