The Hong Kong watch industry was among the industries to benefit under CEPA Phases I and II. Under CEPA phases I and II, the Mainland has applied zero import tariff to 1,108 products of Hong Kong origin which have fulfilled rules of origin, including watch and clock products. But to fulfill the rules of origin and be eligible for zero import tariff in China, the export value of watches and clocks had to comprise at least 30% extra value originated from Hong Kong. This requirement was hard to meet since the movements, the main component of watches and clocks, are mainly imported. Now, following strenuous negotiations between the PRC and Hong Kong Governments on CEPA III, China has lifted the import tariff not only on Hong Kong self-developed watch brands but foreign watch brands acquired by Hong Kong companies.

According to a notice issued by the Mainland Customs and Excise Office in November 2005, “Hong Kong brand” means:

1. The owner of the brand must be a Hong Kong-registered company with a valid Hong Kong business registration, and a valid factory registration for one year;
2. The owner of the brand must complete trade mark registration of the brand under the category of watch and clock products under the Hong Kong Trade Marks Ordinance, and be the registered owner of such trade mark; and
3. The above-mentioned trade mark registration includes a Hong Kong self-developed brand or a foreign brand wholly acquired by a Hong Kong-registered company.

Confirmation procedure for a “Hong Kong brand” is as follows:

1. Hong Kong applicant must submit the following to Trade and Industry Department (TID):- (i) information of the trade mark owner; (ii) trade mark registration certificate; (iii) registration notice issued by Hong Kong Intellectual Property Department; (iv) where a foreign brand has been acquired by a Hong Kong company, written agreement of such acquisition;
2. Officers of Hong Kong Customs and Excise Department (CED) inspectthe factory;
3. TID and CED confirm application;
4. TID notifies Commercial Affairs Department of the Mainland (CADM) of the list of Hong Kong brands;
5. CADM completes the confirmation of the list of Hong Kong brands within 60 days, and informs TID in writing with a copy sent to CED;
6. Issue of certificate of place of origin.

Under CEPA III, “Self-developed brand” is the key to the lifting of import tariff on watches and clocks.

We will now focus on trade mark registration procedures and legal issues concerning acquisition of a foreign brand.

A. Application for registration of self-developed brand

(1) Regional limit of trade mark registration

All trade mark registration is regional. To be legally protected in different regions, separate trade mark registration application in those regions is necessary. Hong Kong watchmakers should consider registering their trade mark registration in China for protecting their self-developed brand against infringement and piracy there.

(2) General procedures for trade mark registration

1. Trade mark search - To avoid wasting time and fees, applicants should conduct a search at the Trade Marks Registry (TMR) to see whether there are identical or similar trade marks already registered before deciding to apply for trade mark registration.
2. Trade mark application - After confirming there are no identical or similar trade marks registered, a trade mark application can be filed. The applicant should provide relevant company particulars, scope of business, trade mark specimen and the class of goods in which the application is made. The classification is made according to NICE Classification, and watches and clocks come under Class 14. Application fees (HK$1,300 and RMB1,000 respectively) must be paid for each trade mark in each class.
3. Trade mark examination - TMR will conduct a trade mark search after receiving an application. In Hong Kong, before a trade mark is eligible for registration, it should possess “distinctive character” to distinguish it from other traders’ goods. If a trade mark is descriptive or promotional of similar goods supplied by other traders, it is not eligible for registration. However, if a trade mark is opposed for registration for lack of distinctive character, it can still be accepted provided the applicant can prove that, as perceived by any customers, it has acquired a distinctive character because of its use before the date of application for registration.
   
   The TMR takes 3 - 6 months to process the trade mark registration application, and its Mainland counterpart 10 - 12 months.
   
4. Notice of trade mark registration - If a trade mark is accepted for registration, the TMR will publish a notice allowing third parties 3 months to lodge an objection. The Mainland notice period is 5 months.
5. Trade mark registration - If no objection is filed against the trade mark application within the notice period, the trade mark will be formally registered and the TMR issues a certificate of registration to the applicant. Registration is for 10 years in both Hong Kong and China. To extend the registration the owner merely has to pay an extension fee before the expiry date.

If the foreign brand acquired by the Hong Kong manufacturer has already applied for trade mark registration with a Paris Convention country or WTO member, pursuant to section 41 of the Hong Kong Trade Mark Ordinance, in case the applicant file a trade mark application in Hong Kong within 6 months from the date of filing of the Convention application or WTO application, such application would receive a right of priority. This right of priority means that the date of filing of the application with a Paris Convention country or WTO member would be regarded as the date such application was made in Hong Kong.

The aforesaid is the procedure and time generally involved in filing a trade mark application. An application for a certificate of origin for a self-developed watch brand should be attached with a trade mark registration certificate issued by the Trade Marks Registry and the registration notice published by the Hong Kong Intellectual Property Department.