Lawmakers have welcomed the financial secretary's budget initiatives to strengthen Hong Kong's intellectual property trading ecosystem, though some emphasised that technical expertise, proper valuation mechanisms and legal updates will be critical to the plan's success.

In the government's latest budget, HK$52 million has been earmarked for establishing an Intellectual Property Academy - a two-year pilot scheme run by the Intellectual Property Department and the Vocational Training Council that will provide on-the-job training.

The administration also allocated HK$28 million to help the Hong Kong Technology and Innovation Support Centre provide patent evaluation services for innovation and technology firms.

Lawmaker William Wong told RTHK that the budget's focus on IP protection and legal framework development is "very useful and very helpful for us to promote innovation and technology industry".

Wong highlighted that valuation remains one of the most difficult hurdles in IP commercialisation.

"Invention is something very high up in the cloud - it can be good, it can be bad, but how do you project the value of the thing? This is something hard to do," Wong said.

He explained that the budget's proposed tax deductions for capital expenditure when purchasing IP would help by lowering transaction costs.

"If you put down the price of the tax of a transaction, then more people can actually engage in it because it's cheaper," he said.

However, Wong cautioned that market distortion in IP pricing comes not from taxation but from information asymmetry between buyers and sellers.

"In Hong Kong, most of the IPs are owned by universities or SMEs. They do not have their own lawyers, therefore they do not really understand well enough about the valuation of that IP. The buyer always wants to lower the price as much as possible," he said.

Wong welcomed government efforts to accredit valuations in order to address this issue.

"If I have an invention and I put it out and say it's worth X amount, the bank will not trust you because who are you? But if I have gone through the valuation process supported by government, and this X amount is accredited, and finance institutions agree with this scheme, then everything is credible," he said.

Meanwhile, fellow lawmaker Nick Chan expressed strong support for the budget while stressing the need to update Hong Kong's copyright ordinance to support artificial intelligence development.

"The big picture is we're in industrialisation 4.0. We need to use proper deployment of AI to help all industries to update and to upgrade," Chan said.

"To that end, we should perhaps update our copyright ordinance."

He noted that the government is moving towards a code of conduct approach where copyright owners can opt out of sharing their material.

"If we do that properly, we will allow Hong Kong to bloom as a generative AI development centre that will allow us to make use of data that we can get from across the border and from around the world," he said.

On the budget's proposal to expand in-house patent examination capacity, Chan stressed the need for more patent examiners "trained in not just law but also in other disciplines".

Chan suggested that as Hong Kong develops its IP ecosystem, consideration should be given to establishing specialist IP courts.

"Hong Kong's arbitration ordinance has already been amended to make very clear that IP ownership disputes could be resolved by arbitration. We can maybe progress further," he said.

"I can see with more IPs coming to Hong Kong or blossoming from Hong Kong, it might be time to consider having IP specialist courts. We have the Labour Tribunal, we have the Family Court, what about an IP court?"

He noted that arbitration offers advantages over litigation for IP disputes, as arbitral awards typically have finality with limited appeal options.

However, he acknowledged the need to "train more arbitrators who are well-versed in not only intellectual property but different aspects of technology".



Edited by Thomas McAlinden