For discussion
on 21 June 1996
FCR(96-97)23

ITEM FOR FINANCE COMMITTEE

CAPITAL WORKS RESERVE FUND
HEAD 710 - COMPUTERISATION
Intellectual Property Department
New Subhead "Computerisation of the Patent Registration System"
HEAD 78 - INTELLECTUAL PROPERTY DEPARTMENT
Subhead 001 Salaries

Members are invited to approve -

1. the creation of a non-recurrent account subhead with a commitment of $22,230,000 for the computerisation of the new patent registration system (the PATCOM system) in the Intellectual Property Department (IPD); and
2. an increase in the ceiling of the total notional annual mid-point salary value of non-directorate posts in the permanent establishment of IPD in 1996-97 by $2,334,120 to create five non-directorate posts to develop and implement the PATCOM system.

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PROBLEM
PROPOSAL
JUSTIFICATION
FINANCIAL IMPLICATIONS

Non-recurrent expenditure
Non-recurrent staff cost
Annual recurrent cost
Implementation plan

BACKGROUND INFORMATION

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PROBLEM

The existing manual system on patent registration is unable to cope with the expanded and enhanced activities of the new independent patent system. We need a computer system to process patent and short-term patent applications and grants, maintain an electronic register of patents granted and record subsequent changes to the register.

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PROPOSAL

2. The Director of Intellectual Property (DIP), on the advice of the Director of Information Technology Services (DITS), proposes to develop a computer system for the Patents Registry of the Intellectual Property Department (IPD).

JUSTIFICATION

3. The current patent law in Hong Kong is dependent on United Kingdom patent law. We will need to introduce a new local Patents Ordinance to ensure continuity in the protection of inventions after 30 June 1997.

4. We established a Patent Steering Committee (PSC) in 1986. In a report issued in January 1993, the PSC recommended a new patent registration system for Hong Kong. It also recommended that we should develop a computer database for patents registered in Hong Kong so as to provide members of the public and Hong Kong industries with an effective search tool for information on Hong Kong patents.

5. Under the new patent system, we need to process patent and short-term patent applications effectively, to record and publish such patent applications and grants, to maintain an electronic register of such patents, and to record subsequent assignments, licences and renewals. We also need to provide the public with an effective search tool on patents registered in Hong Kong. The existing manual system will not be able to meet these new requirements. We therefore propose to replace it with a computerised system.

6. The proposed computerisation of the new patent registration system (PATCOM system) aims at -

1. providing facilities for processing applications for registration and grant of patents and short-term patents;
2. maintaining a register of such patents and storing patent data and documents by electronic means;
3. providing facilities for the processing of post-registration matters such as assignments, change of name and address, renewal, etc.;
4. allowing the dissemination and distribution of information on patents protected in Hong Kong through a convenient electronic media if necessary;
5. facilitating the grafting of data of the existing patents from the UK Patent Office database, and the processing of those applications filed under the existing system but need to be registered under the transitional arrangements to be provided for under the new Patents Ordinance; and
6. supporting the administrative and management functions of the new Patents Registry.

FINANCIAL IMPLICATIONS

Non-recurrent expenditure

7. The DIP and DITS estimate that the development and implementation of the PATCOM system will incur a non-recurrent expenditure of $22,230,000. A breakdown of the cashflow requirements by financial year is as follows -

8. As regards paragraph 7(a), the cost of $4,600,000 is for a mid-range computer system, including workstations, scanners, printers, peripherals, data communication equipment and system software.

9. As regards paragraph 7(b), the cost of $300,000 is for cabling from the computer room to all workstations and peripherals at the IPD office.

10. As regards paragraph 7(c), the cost of $2,000,000 is for site preparation at the IPD office. The site preparation work includes trunking, partitioning patent information room and scanning room, installing power points and data ports, reprovisioning electricity, lighting and ventilation.

11. As regards paragraph 7(d), the cost of $11,500,000 is for acquiring professional information technology services for the development of the computer system including detailed system design, programming, testing and commissioning of the computer system by the Information Technology Services Department (ITSD), and the engagement of patent specialist services and temporary staff in IPD to help implement the system.

12. As regards paragraph 7(e), the cost of $120,000 is for acquiring start-up consumables and training.

13. As regards paragraph 7(f), the cost of $1,730,000 consists of $338,000 for acquiring professional data conversion services, including verification of the legal status and the relevant data of the patents registered with the UK Patent Office, and grafting of data of the existing patents from that office; and $1,392,000 for hiring temporary staff to convert and input data into the database of the Hong Kong system.

Non-recurrent staff cost

14. IPD will incur non-recurrent staff costs of $2,950,000, being the costs for 18 months of additional professional and supporting staff in data conversion, development and implementation of user requirements and formulation of future work procedures of the system. To enable the creation of the five non-directorate posts required in 1996-97 (namely one Chief Intellectual Property Examiner (Chief IPE), one Senior IPE, one IPE I, one IPE II and one Clerical Officer I), it is necessary to increase the notional annual mid-point salary value of IPD from $44,481,000 by $2,334,120 to $46,815,120.

15. In addition, we need $710,000 to meet the staff costs for 18 months of ITSD to provide technical support for the development and implementation of the system. ITSD will meet this requirement by redeployment.

Annual recurrent cost

16. The proposed system will require an additional annual recurrent cost of $3,070,000 on inception, made up as follows -

17. As regards paragraph 16(a), the annual expenditure of $540,000 is for maintaining the computer hardware and software.

18. As regards paragraph 16(b), the annual expenditure of $60,000 is for system consumables and training of the system support staff.

19. As regards paragraph 16(c), the annual expenditure of $720,000 is for acquiring contract staff to supplement ITSD staff resources for application maintenance (See paragraph 21 below as well).

20. As regards paragraph 16(d), the annual expenditure of $1,270,000 is to meet the additional staff costs of IPD in providing user co-ordination and general administration to the system.

21. As regards paragraph 16(e), the annual expenditure of $480,000 is to meet the staff costs of ITSD in providing on-going maintenance and support to the system.

Implementation plan

22. We gazetted the Patents Bill on 7 June and will introduce it into the Council on 26 June. Having regard to the need for a new local patent law to be enacted before 1 July 1997 and the lead time required for the installation of the computer system to operate and manage the new patent registration system, we need to seek funding approval from Members prior to the enactment of the Bill.

23. The computer system will meet the requirements of the application and other procedures set out in the Patents Bill. These follow closely the recommendations in the Patent Steering Committee Report which have received general support during the two consultation exercises. They are also in line with international standards and reflect proposals for harmonisation of procedures worldwide under discussion in the World Intellectual Property Organisation. We consider that approval of this item now will not pre-empt subsequent discussion of the Bill in the Council.

24. The proposed system will have to be in place by February 1997. In view of the tight time-table, we shall develop the system in two phases -

BACKGROUND INFORMATION

25. We briefed the Legislative Council Panel on Trade and Industry on the proposal at its meeting on 9 May 1996. Members of the Panel indicated support in principle for the proposal and raised no objection to us approaching the Finance Committee prior to the enactment of the Patents Bill.

26. We issued a Legislative Council Brief on the Patents Bill on 5 June 1996, published the Bill in the Gazette on 7 June 1996 and will introduce it into the Council on 26 June 1996.

Trade and Industry Branch

June 1996

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