INTRODUCTION

Since 1997, a series of arrangements have been in place between Hong Kong and the People's Republic of China ("PRC") to ensure the smooth cross-border recognition and enforcement of judgements in the two jurisdictions. Hong Kong and the PRC have recently signed a sixth arrangement, which for the first time includes specific articles and references to Intellectual Property Rights ("IPRs").

In this article, we look at what the changes this new arrangement between Hong Kong and the PRC will bring in relation to enforcement of judgments involving IPRs.

BACKGROUND

On 18 January 2019, the Hong Kong government and the Supreme People's Court of the PRC signed the Arrangement on Reciprocal Recognition and Enforcement of Judgments in Civil and Commercial Matters by the Courts of the Mainland and of the Hong Kong Special Administrative Region ("the New Arrangement"). Although it is not yet clear when the New Arrangement will come into effect, both jurisdictions are currently in the process of promulgating and completing relevant procedures for the new Arrangement to come into force.

The New Arrangement will, upon commencement, supersede the Arrangement on Reciprocal Recognition and Enforcement of Judgments in Civil and Commercial Matters by the Courts of the Mainland and of the Hong Kong Special Administrative Region Pursuant to Choice of Court Agreements between Parties Concerned ("the Old Arrangement"). The Old Arrangement came into effect in 2008, and will remain in force until the commencement date of the New Arrangement is announced.

Under the Old Arrangement, judgments were only mutually enforceable between the Hong Kong and the PRC courts if the judgment required the payment of money in a civil or commercial case and the parties had agreed to a choice of court agreement in writing prior to the dispute.1

The New Arrangement will broaden the types of judgments the Hong Kong and the PRC courts will enforce in five ways, making the relationship between the courts of the two jurisdictions stronger. The New Arrangement will:

  • Apply to a broader range of cases; it will not only apply to all civil and commercial cases, but also cases related to civil damages in criminal cases;2
  • Do away with the requirement for a choice of court agreement in writing between the parties;3 this will enable contracting parties without a choice of court clause in their agreement to benefit from the New Arrangement;
  • Cover reciprocal recognition and enforcement of monetary and non-monetary rulings;4
  • Allow for partial recognition and enforcement of awards;5 and
  • Expand the number of courts whose decisions are recognised by PRC courts to now include Hong Kong Labour, Lands and Small Claim Tribunals decisions.6

Certain types of matters are specifically excluded from the New Arrangement, including judicial review cases, cases heard by the Hong Kong courts arising directly out of exercise of administrative powers7, Hong Kong court rulings on anti-suit injunctions and orders for interim relief and PRC court rulings concerning preservation measures.8 The Arrangement will also not apply to judgments related to family, estate, marine matters, bankruptcy and insolvency and a natural person's voting power.9

Provisions specifically related to IPRs

The New Arrangement will apply the same definition of IPRs as Article 1(2) of the 1995 Agreement on Trade-Related Aspects of Intellectual Property Rights ("TRIPS"), and will cover copyright, trade marks, geographical indications, industrial designs, patents, integrated circuit designs and trade secrets. The New Arrangement expands the TRIPS list of IPRs and adds plant variety rights as stipulated in Hong Kong's Plant Varieties Ordinance and Article 123(2)(7) of the General Provisions of the Civil Law of the People's Republic of China.10 This is the first time plant variety rights have been recognised as an IPR in a recognition and enforcement of judgments arrangement between the PRC and Hong Kong.

Which judgments involving IPRs will be mutually recognisable and which ones will not?

In general, judgments ruling on contractual disputes involving IPRs will be covered under the New Arrangement.

The New Arrangement has more requirements in relation to cases involving infringement of IPRs, civil disputes over acts of unfair competition under Article 6 of the Anti-Unfair Competition law of the People's Republic of China heard by PRC courts, and disputes over passing off heard by the Hong Kong courts. In these situations, judgments will only be enforceable if11:

  • The act of infringement, unfair competition or passing off was committed in the requesting place;
  • The IPR or interest concerned is subject to protection under the law of the requesting place; and
  • The ruling is on monetary damages, including exemplary damages, for acts of infringement which were committed in the requesting place.

For example, if a Hong Kong court issues an award for damages for trade mark infringement and the Plaintiff wants to enforce the award in the PRC, in the Hong Kong judgment the Plaintiff must have asserted a valid Hong Kong trade mark against infringing goods in Hong Kong.

However, judgments concerning any of the following matters will be excluded from the New Arrangement12 :

  • Infringement of invention patents and utility model patents heard by a PRC court;
  • Infringement of standard patents (including "original grant" patents);
  • Short-term patent cases heard by a Hong Kong court;
  • Confirmation of the licence fee rate of a standard-essential patent heard by a PRC court or Hong Kong court;
  • Any IPRs not covered under Article 5 of the New Arrangement;
  • A ruling on the validity, establishment or subsistence of an IPR. (However, a ruling on liability based on such rulings and which complies with the relevant requirements of the New Arrangement will be recognised and enforced).

The New Arrangement will not apply to most patent related cases, licence fee rates, cases relating to IPRs not covered under Article 5 of the New Arrangement and rulings on the validity, establishment or subsistence of an IPR13. Hong Kong and PRC courts will not mutually recognise and enforce such judgments. Parties therefore must carefully consider where to commence litigation to avoid litigating twice.

CONCLUSION

This is the first step towards the recognition and enforcement of judgments concerning specific IPRs between Hong Kong and the PRC. Although in general, judgments ruling on contractual disputes involving IPRs will be covered under the New Arrangement, there are some restrictions for infringement of IPRs, passing off and unfair competition, and significant restrictions for cases related to patents. An important next step towards robust IPR protection between the two jurisdictions will be to sign a stand-alone Arrangement covering IPRs, with fewer restrictions and special provisions governing cases related to patents.

Footnotes

1 Article 1 of the Old Arrangement

2 Article 1 of the New Arrangement

3 Article 1 of the New Arrangement

4 Article 16 of the New Arrangement

5 Article 19 of the New Arrangement

6 Article 4 of the New Arrangement

7 Article 3(1)-(2) and (4)-(7) of the New Arrangement

8 Article 4 of the New Arrangement

9 Article 3(1)-(2) and (4)-(7) of the New Arrangement

10 Article 5 of the New Arrangement

11 Article 11 and Article 17 of the New Arrangement

12 Article 3(1) and Article 15 of the New Arrangement

13 Article 15 of the New Arrangement

Visit us at www.mayerbrownjsm.com

Mayer Brown is a global legal services organization comprising legal practices that are separate entities (the Mayer Brown Practices). The Mayer Brown Practices are: Mayer Brown LLP, a limited liability partnership established in the United States; Mayer Brown International LLP, a limited liability partnership incorporated in England and Wales; Mayer Brown JSM, a Hong Kong partnership, and its associated entities in Asia; and Tauil & Chequer Advogados, a Brazilian law partnership with which Mayer Brown is associated. "Mayer Brown" and the Mayer Brown logo are the trademarks of the Mayer Brown Practices in their respective jurisdictions.

© Copyright 2019. The Mayer Brown Practices. All rights reserved.

This article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein. Please also read the JSM legal publications Disclaimer.