Patents protection
Amongst the different IPR, patents are most relevant in the context of life sciences because these protect pharmaceutical products and substances obtained by means of chemical process. A standard patent grant is valid for 20 years subject to payment of annuities in Hong Kong and in China. Hong Kong also has short-term patent grant allowing eight years of protection subject to payment of renewal fees on the fourth year.
Standard patent applications in China normally take more than three years to complete. Acceptance of standard patent applications in Hong Kong is dependent on the acceptance of the corresponding patent applications in the designated patent offices, namely China and UK and so the application time in Hong Kong closely follows that of the designated patent applications. In view of the long waiting time to register a patent, short-term patent grant has been introduced in Hong Kong to cater for inventions with a short commercial life which is not worthwhile to go through the lengthy process of registering a standard patent.
Evaluation of patents
The patent laws in Hong Kong and China have set out the eligibility of an invention for patent registration namely, there must be novelty and inventiveness. During patent application, applicants cannot take any infringement action until they receive the patent grants and there is no guarantee that all patent applications will be successful. Hence, VCs are often put in an awkward position when the subject companies have filed a lot of patent applications whose patentability cannot be confirmed until the grants are published say three years later. In such circumstances, VCs may consider hiring independent patent agents who are experienced in drafting patent specifications and identifying the patentability of different inventions to give opinions on the chances of success of the patent applications. The patent agents will normally conduct patent searches in the major patent offices in the world and ascertain whether the inventions are patentable. Although the patent agents' opinions are not conclusive, they provide a fairly good assessment of the chances of success to enable the VCs to evaluate the IPR of the subject companies.
IPR licenses
Most IPR licenses are required to be registered within certain time limits prescribed under different laws in order to be enforceable in China. There is no compulsory requirement to register IPR licenses in Hong Kong but it is advisable to register trademark licenses where the trade mark owner resides overseas and has licensed the use of its trade mark to a local party in Hong Kong so that the use by the local party would accrue to the owner and the registration will be safe from cancellation based on the non-use ground.
China
Particular attention should be paid to the legal issues involved when investing in life sciences in China because there are a number of prohibitions and restrictions on the manufacturing, distribution and import of pharmaceutical products and traditional Chinese medicine by foreign companies. In very broad terms:
? Drug manufacturing - prohibited for some drugs and highly restricted for most others.
? TCM manufacturing - extracting certain natural resources, such as musk, is prohibited.
? R&D centers - permitted for multinationals.
? Online sales of drugs - prohibited.
? Hospitals - permitted with a Chinese JV partner.
? Export - generally permitted.
? Wholesale, retail and distribution - restricted but opening up.
Most IPR licenses are required to be registered within certain time limits prescribed under different laws in order to be enforceable in China. There is no compulsory requirement to register IPR licenses in Hong Kong but it is advisable to register trademark licenses where the trade mark owner resides overseas and has licensed the use of its trade mark to a local party in Hong Kong so that the use by the local party would accrue to the owner and the registration will be safe from cancellation based on the non-use ground.
