Hong Kong Marks Milestone For Original Grant Patent (OGP) System Launched in 2019
Introduction
The Hong Kong Intellectual Property Department (the "IPD”) announced recently that it has received its 1,000th application for an Original Grant Patent ("OGP"). This significant milestone was reached at the end of 2024, just five years since the launch of the OGP system in 2019.
Prior to December 2019, the "re-registration" route was the most popular way to secure standard patent protection in Hong Kong. This method allowed patent owners to extend the protection of existing China, EU, or UK patents to Hong Kong at a low cost without undergoing a separate substantive examination. Since December 19, 2019, the OGP system has provided an alternative route for inventors or rights owners to secure protection for standard patents directly in Hong Kong.
According to the latest statistics released by the IPD, the OGP system is popular among both local and non-local applicants. The IPD also highlighted important benefits of registering OGPs in Hong Kong, setting it apart from counterparts in neighbouring jurisdictions as discussed below.
Key Numbers Regarding OGP Five Years Onward
- Applicant Demographics: The number of local and non-local applicants of OGPs in Hong Kong is almost equally split, with local applicants accounting for around 46.7% of the total as of January 2025.
Among non-local applicants, Korea, Mainland China, and the United States applications take the lead. This may be due to the fact that Hong Kong accepts OGP filings in either Chinese or English, making applications more cost-efficient and less time-consuming for both local and foreign applicants.
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Technical Areas: In terms of technical areas of OGP filings, a little less than 50% of the applications come from the electricity sector (e.g., logistics, AI), 34.9% relate to mechanical engineering (e.g., consumer goods, furniture), and 17.5% are from chemistry (e.g., biotechnology, pharmaceuticals).
OGP in Hong Kong is distinguished by the following benefits:
“Patent Box” Profits Tax Concessions and Important Timelines
The private sector enjoys "Patent Box" concessions for profits derived from eligible IP income, where the profits tax rates is significantly reduced from 16.5% to 5% under the Inland Revenue (Amendment) (Tax Concessions for Intellectual Property Income) Ordinance 2024. Income derived from royalties, the sale of eligible IP or embedded products/services, or any insurance, damages, or compensation related to IP is eligible for tax reduction in accordance with the nexus approach adopted by the Organisation for Economic Co-operation and Development ("OECD").
Singapore also launched a similar tax reduction programme under the Intellectual Property Development Incentive (IDI) (for more information regarding Singapore's IDI, please refer to this page), where businesses can benefit from a tiered tax rate of either 5%, 10%, or 15%, with the lower rate applying to businesses that meet a higher annual business spending requirement. Additionally, during the extended period (not more than 10 years for each extension), the concessionary tax rate in Singapore will increase by at least 0.5% at regular intervals. This makes Hong Kong's flat rate of 5% more straightforward and potentially more advantageous for businesses looking to maximize their tax benefits without the complexity of meeting certain spending requirements.
"Eligible intellectual property" is defined broadly in the Inland Revenue Ordinance ("IRO") to include a wide range of intellectual property, giving Hong Kong an edge over its regional competitors. This includes applications for patents and plant variety rights granted in or outside Hong Kong during the initial two-year grace period (started in July 2024), and copyright subsisting in software under the Copyright Ordinance or the law of any place outside Hong Kong.
While currently patents and plant varieties registered outside of Hong Kong also benefit from the "Patent Box" tax concessions, from 5 July 2026 onwards, taxpayers will only be able to benefit from this scheme if the patents or plant varieties are registered in Hong Kong. From then on, an application for a (foreign) standard patent filed in Hong Kong by the "re-registration" route will not be eligible under this scheme. On the other hand, since there is no copyright registration regime in Hong Kong, copyright registration (in Hong Kong) is not a prerequisite for eligibility to this scheme going forward if the underlying right is a copyright subsisting in software.
Twelve-Month Provisional Filing Flexibility
The IPD encourages applicants to use the Hong Kong OGP in the same way as a US provisional patent application. Applicants in Hong Kong may secure a quick filing date first and then file a request for deferral of formality examination for up to 12 months to consider territorial coverage and scope of protection. The initial official fees for filing a request for a grant of a standard patent in Hong Kong are as low as HKD413 (around USD53.21), allowing applicants to secure a filing date at a very low cost.
Deferring examination provides applicants with additional time to formulate and draft patent claims, and to assess the commercial viability of their invention. During the deferred period, inventors can evaluate market conditions, potential competitors, and the overall demand for their product or technology. Also, by deferring examination, applicants can postpone incurring costs in the post-filing stages, such as official examination fees and other associated costs. This can be particularly beneficial for startups and small businesses with limited budgets or for patents where the commercial value is not yet certain.
The Future of OGP And Patents in Hong Kong
As part of the IPD's efforts to improve its patent capabilities, its team of patent examiners now consists of 80% Master or Doctorate degree holders to maintain the high quality of OGPs granted in Hong Kong. The IPD aims to achieve institutional autonomy in substantive examination by 2030.
Takeaway
The milestone of receiving the 1,000th application for an OGP in Hong Kong underscores the growing importance of the OGP system in Hong Kong and the efforts of the government to position Hong Kong as a regional IP trading hub.
