SomeWay to Go

Mutual enforcement of Chinese and Hong Kong judgments is undesirable at present, argues David Buxbaum

The recent news about suits by Microsoft and other corporation a, ,against various Hong Kong companies for intellectual property (IP) piracy and infringement is certainly not a surprise. Intellectual property piracy has been rampant in Hong Kong for some time despite periodic government raids against some offending outlets.

In addition, there have been important Hong Kong corporations, and Taiwan companies using Hong Kong as a base, \which have been at the forefront of establishing factories in China for the production of pirated software, video disks, CD Roms and books, as well as for use of infringing of trade dress, trademarks and design patents. Some of the most notorious cases in China, such as the Kongalu piracy of Kellogg's trade dress have been substantially funded and assisted by Hong Kong interests.

In China, administrative action has been at the forefront of enforcement programmes. The General Administrator for Commerce and Industry (GAIC), Patent Bureau, Anti-fake organization, Copyright Bureau, Public Security, IP Task Forces and Customs
Bureau have been most significant in IP enforcement. The involvement of these authorities has not, however, been to the exclusion of the judiciary, which has come down hard on IP infringement in leading cases such as Microsoft et al v juren (Beijing Intermediate Court (1996)); Kelloggs v Kongalu et al (Meizhou Intermediate Court (1995)) and the Disney case in Beijing.

In Hong Kong, on the other hand, while the customs, police and prosecutors have all played a significant role in IP enforcement, the role of the judiciary, has become increasingly Important.

Although China is not yet a member of the World Trade Organization (WTO), this is not because of its failure to promulgate a full set of laws on IP. China has adhered to virtually all international treaties and conventions for the protection of IP, and has also promulgated legislation as required by said treaties. Furthermore, the Chinese Government has entered into two agreements on IP protection with the Us Government, which have further
accelerated the development of truly, comprehensive Chinese legislation in the IP field.

Hong Kong's law is in virtually full compliance with its obligations as a WTO member and essential compliance is not in doubt. The basis of compliance of course is quite different as between Hong Kong and China because of the fact that Hong Kono's IP law is found predominantly in case law while China's is statutorily based. For example, while China has passed comprehensive statues to deal with the problem of unfair competition, the common law in Hong Kong addresses the same issue via the traditional rules against passing off and the like. While there is great similarity in the actual nature of the substantive law of the two jurisdictions, the means of achieving enforcement  in Hong Kong and China are quite different.

There are substantial differences between the judicial institutions of the two jurisdictions. Over an extended period of time Hong Kong has produced - or welcomed from abroad solicitors, barristers, judges and other judicial personnel well-trained to modern western standards(although clearly continued improvement is required).

In China, judicial institutions were virtually non-existent from 1958 to 1976. When they were re-established in the late 1970s, there were insufficient trained personnel to staff them. The development of legal institutions since 1978 has, however, been nothing short of amazing. The training of lawyers has proceeded both  with alacrity and outstanding results. A national qualifying examination has been introduced for legal practitioners. Although unfortunately the Judges Law, requiring similar standards for judges, was not passed until 1996. Of necessity China has many sitting judges who are not properly trained. In addition, Chinese judges receive very 1ow salaries- often 1ower than those of junior lawyers.

Finally, and perhaps most importantly, while the judiciary in Hong Kong is independent, judges in China receive their salaries, and as importantly, their housing, from the very gov erment which is likely to own local contpanies appearing before their courts.

After 1 Iu1y 1997 both the Chinese and Hong Kong legal systems will operate within one national entity. The need for both jurisdictions' customs officers, prosecutors, police and administrative agencies to work together to protect IP is obvious. The mutual enforcement of judicial decision from one jurisdiction in the other jurisdiction would seem logical. Yet with the differences in the quality of the judiciaries, it is not something likely to be desirable to Hong Kong companies.

 Until legal institutions in China reach a level comparable of those of Hong Kong, it may be best not to change the existing arrangement whereby a party can sue in Hong Kong on a judgment for damages obtained in China, as on a debt, and obtain permission from the court. pursuant to the Code of Civil Procedure in China, to sue on a comparable Hong Kong judgment. In the long run, however, mutual enforcement of IP and other judgments is clearly desirable.