Breaking barriers: Hong Kong and mainland China set to reciprocally enforce intellectual property judgments

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A landmark agreement signed in 2019 to allow for wide-ranging reciprocal enforcement of judgments between Hong Kong and mainland China is finally due to take effect. The Mainland Judgments in Civil and Commercial Matters (Reciprocal Enforcement) Ordinance (Cap. 645) (MJREO) is set to come into force on 29 January 2024.

Hong Kong is a special administrative region of China and has its own separate legal regime. Therefore, special arrangements have been necessary to allow for cross-border enforcement of judgments between Hong Kong and mainland China. Previous arrangements were limited in scope and only applied to commercial contracts and monetary judgments. The MJREO will broaden the scope of applicable judgments and cover, not only a wide range of judgments relating to contractual and tortious disputes, but expressly includes judgments in respect of specified intellectual property right cases. The new regime will also cover both monetary and non-monetary relief.

Why does this matter to you?

The mechanism for mutual recognition and enforcement of judgments relating to intellectual property is an important and positive development. Intellectual property owners will now be able to seek enforcement against the assets of a defendant across the border without the need to start a fresh action. Overseas parties will have the option of suing in English, in a common law jurisdiction, and enforcing against assets held in mainland China.

Key points:

• The specified intellectual property rights set out in the MJREO cover trade marks, geographical indications, patents, industrial designs, copyright, plant varieties, integrated circuit designs, and the right to “protect undisclosed information” which we understand to mean “trade secrets”.

• The Ordinance specifically covers judgments ruling on contractual disputes involving intellectual property rights.

• Judgments relating to infringement of intellectual property rights are also covered except for mainland rulings relating to infringement of patents and utility models and Hong Kong court judgments relating to the infringement of standard patents (including original grant patents) and short-term patents, and judgments relating to the licence fees of standard essential patents in both Hong Kong and the mainland.

• The MJREO will cover punitive and exemplary damages in relation to intellectual property infringement disputes but not specific performance (i.e., no injunctions, interim relief or preservation orders), apart from trade secrets, where both punitive damages and specific performance are enforceable.

• Judgments on the validity of intellectual property rights are excluded. However, a judgment based on a ruling on the validity of an intellectual property right as a preliminary issue shall be recognised and enforced under the MJREO. For example, a plaintiff may enforce a contractual claim for licence fees where the defendant challenged the validity of the trade mark and the court ruled as a preliminary issue, that the trade mark was valid and, therefore, the defendant was liable for the fees.

• Significantly, the MJREO removes the previous requirement for parties to have entered into an exclusive jurisdiction agreement, choosing either mainland Chinese or Hong Kong courts as the exclusive forum for their dispute. This will give parties greater flexibility when choosing the best forum to pursue their claims. Furthermore, in most intellectual property infringement cases, the parties are unlikely to have an agreement at all, let alone an exclusive jurisdiction clause.

• Under the MJREO, the party seeking recognition and enforcement will need to satisfy certain jurisdictional criteria, by showing a connection between the dispute and the place of the original judgment. In particular, in intellectual property infringement cases, it will be necessary to show that the act of infringement was committed in the place where the judgment was granted and that the intellectual property right is protectable under the law of that place.

• Enforcement will be by way of a simple registration process.

The MJREO makes Hong Kong the first jurisdiction to have such an arrangement with China, strengthening its position as the venue of choice for resolution of disputes with a mainland Chinese connection, and as a regional intellectual property trading centre. It is important to note that the intellectual property provisions are complex, especially with regard to available relief, and there are significant exclusions which need to be considered carefully. However, the regime should better protect the rights and interest of businesses and result in greater certainty and expediency for parties litigating in Hong Kong or the mainland.