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Speech by SCED at keynote luncheon of Business of Intellectual Property Asia Forum

Following is the speech by the Secretary for Commerce and Economic Development, Mr Edward Yau, at the keynote luncheon of the Business of Intellectual Property Asia Forum today (December 7):

Distinguished guests, ladies and gentlemen,

Good afternoon. It gives me great pleasure to join you all at this luncheon of the 7th Business of Intellectual Property (BIP) Asia Forum.

Since its inaugural launch in 2011, the BIP Asia Forum has established itself as a major intellectual property, or IP in short, event in Asia. The Forum is a fitting testament to the rapid development of knowledge-based economies and growth in the global IP trade in recent years. Hong Kong is well positioned to be the host of this important event, and 80 renowned speakers and your presence from all over the world signify the importance of this subject to all.

This year's Forum takes a closer look at the synergy between IP and innovation. Not only is innovation a buzzword of the day, it is a game changer in a highly globalised and fast changing world today. Innovation is more than the creation of a new product, or invention. Innovation is a process where new, improved or at times disruptive concepts are being put forth and brought into business operation and the market. The results could alter, enhance, or transform the way of doing business, or significantly vary the respective positioning of the providers in the market.

What does IP have to do with innovation? The simple answer is that they flourish in parallel and complement with each other. IP protects and incentivises those who take the risk to introduce novel products and services into the economy. It also provides a framework for the rather difficult and challenging journey that any idea has to undertake before becoming a commercially viable option. Thanks to IP, we are able to push our creative boundaries, upgrade our offerings, and explore uncharted territory. On the other hand, innovation also drives IP development, as a more comprehensive IP system would be called for in ensuring the fruits of innovation are preserved and protected. You've heard the examples quoted by the CE (the Chief Executive, Mrs Carrie Lam) on 3-D printing and the obvious example of smart phones, which are supported by hundreds of IP patented components. Let me share with you two local examples.

"Fung Wan" has been a unique comic brand of Hong Kong for over two decades. Through meticulous licensing arrangements of the IP rights involved and collaboration with other members of the creative industries, the brand has been successfully branching out into the fields of online and portable phone video games, TV, movies, and the latest of all, musicals and timepieces.

Aside from established brands, we also see new creations coming on stream from time to time in Hong Kong through the good exploitation of IP. One of these is a face mask created and manufactured locally based on a nanofiber filtration technology developed by the Nano and Advanced Materials Institute Limited (NAMI) of Hong Kong. The brand name of the mask is NASK, spelt N-A-S-K, which stands for Nanotechnology, Anti-dust, Safe and Killing bacteria. The NASK brand name is protected by trade mark law, while its manufacturing technology is protected by patent law with patent applications filed in the US (United States), Europe, Mainland China and Hong Kong.

In April 2017, NASK won a gold medal in the 45th International Exhibition of Inventions of Geneva. The product is a success story of how we harness the power of IP to commercialise innovation for renewed economic value. We certainly look forward to more success stories of this kind in the days to come.

The theme today is "Changes, growth and connectivity". Innovation and IP together bring about changes and enhanced connectivity in today's economy. Innovation and IP have proved themselves the drivers of business growth, by enabling a brand and an invention to diversify by crossing over to other sectors. It allows them to venture into pristine business territory, explore untapped customer bases, and bring together players from different fields for greater economic returns that would stand to benefit many.

Indeed when we turn on our personal computers or our smart phones, we can immediately see a bunch of software and Apps, which provide us with a convenient tool for our daily life, office work and connection with different corners of the world. It is hardly an exaggeration to say that IP commercialisation and the technological innovation arising from such an important process has brought profound and irreversible changes to our lives and the way we move forward to a more prosperous future.

With this in mind, it came as no surprise that among the top five on Forbes' 2017 most valuable brands list, four are technology-based and IP-intensive enterprises.

What is equally revealing can be found in the report just released by the World Intellectual Property Organization (WIPO) last month. According to WIPO's findings, the value of intangible capital - notably in the form of technology, design and branding - accounts for around one-third of production value - or some US$5.9 trillion in 2014 - across 19 manufacturing industries. The value added by IP and the contribution it plays in our economic activities is huge and clear.

Hong Kong treasures the value of IP commercialisation and is well placed to serve as an IP trading hub. We have all the necessary ingredients for success in store - a sound legal system, a robust IP protection regime, capable research personnel, sophisticated financial markets ready and keen to do IP trading, world-class professional services and our close ties with Mainland China together with our rich experience and expertise in working with the rest of the world. Such opportunities will be magnified as Hong Kong positions itself as the hub for the Belt and Road and the focal point in the greater Bay Area initiatives. Hong Kong's function as an international financial, trading and navigation centre will stand tall, and the needs for both innovation and creativity as well as the resulting demand for IP are apparent and abundant.

Aside from these advantages timing is important, which also holds true for the IP business as in many other businesses. And I am glad to say that our ambition to foster IP commercialisation and trading in Hong Kong comes at a perfect time, as the IP business is booming on the Mainland as well as among our neighbours in Asia. Three of the five largest IP offices in the world hail from Asia, most notably the State Intellectual Property Office of China. China has also topped the league of IP filings since 2011, and is regarded as one of the most happening places in the IP world.

When I say innovation, creativity and IP are connected, Hong Kong is putting all these into an organic link under our new policy directions. We are keen to find a new engine of economic growth, and innovation and creative design are the keys to charge this new engine.

The Government has set a goal, in the recently released Policy Address, to double gross domestic expenditure on research and development (R&D) as a percentage of the gross domestic product to about $45 billion a year, i.e. from 0.73 per cent to 1.5 per cent, by the end of the five-year term of the current Government. And we will provide additional tax deductions for expenditure incurred by enterprises on R&D.

For the creative industries, we will inject an additional funding of $1 billion into the CreateSmart Initiative to support the development of the design industry and the creative industries. In particular, we hope the projects funded by the Initiative can help nurture young talent, and enhance the community's awareness of creative thinking and design capability.

For these initiatives in innovation and creative industries to take off, the importance of IP protection is obvious and apparent. We will continue to spare no efforts to enhance our IP regime, and will make our best endeavour to strengthen our role as an IP trading hub in the Asia-Pacific region. By encouraging more IP commercialisation and trading to take place in the city, we look forward to sharpening the global competitiveness of Hong Kong, as well as the capacity of the city in embracing innovative changes, propelling economic growth and diversity, and bolstering connectivity with the rest of the world.

To enable Hong Kong to ride on the huge opportunities brought by IP commercialisation and trading, the Intellectual Property Department is forging ahead with a scheme on IP consultation services for small and medium enterprises (SMEs), as well as an IP Manager Scheme to help local SMEs build up their IP manpower capacity and increase their competitiveness through IP management and commercialisation. These schemes have been well received by the businesses involved.

Promotion work aside, we are also committed to enhancing our IP regime. In spite of the failure in securing an update on our Copyright Ordinance in previous years, we are reviewing our strategies hand in hand with stakeholders and allies from the trade. We will not give up, but need to be pragmatic and focused in sailing through the political waters with our legislature. In the meantime, we will not let go of any opportunity to tighten enforcement actions, as well as bringing a number of testing cases to our courts relating to illicit streaming activities.

We are glad to have amended our patent law last year to set out the legislative framework for establishing an original grant patent system in Hong Kong, which we hope can be launched in 2019 at the earliest. For trade marks, we have been working to seek implementation of the Madrid Protocol (Protocol Relating to the Madrid Agreement Concerning the International Registration of Marks) in Hong Kong, an initiative which we believe will enable businesses to save time and cost in obtaining and managing international trade mark registrations.

Hong Kong amended its arbitration law this June, to make it clear that all IP disputes are capable of settlement by arbitration. We hope that this will strengthen Hong Kong's position in attracting more businesses to resolve IP disputes, whenever they arise as a hard fact of life, by resorting to arbitration in Hong Kong. You will learn more from the Secretary for Justice, who will open the concurrent session entitled "International IP Dispute Resolution - A New Chapter for Hong Kong" following this luncheon. Other dispute resolution experts will join the session to share their insights, so stay tuned.

Ladies and gentlemen, innovation is the driving force for business upgrading and restructuring of industries, and IP is the engine behind powering innovation. IP commercialisation is mission-critical to the further development of a knowledge-based economy. Hong Kong is heading in this direction too. We are leveraging on IP as a new growth area, and developing the IP industry into a vibrant sector that helps boost the economy and create job opportunities.

Let me close by borrowing a quote from the author of the Little Prince (Antoine de Saint-Exupery), "If you want to build a ship, don't drum up people to collect wood and don't assign them tasks and work, but rather teach them to long for the endless immensity of the sea." Indeed, IP and innovation are but a great vessel setting us off on an exciting voyage across the vastness of economic opportunities and sustainable prosperity. So, we are all on board and let us have a happy sailing.

I wish you all the best of business at this Forum. Thank you.


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