December 2001

Introduction

For many years the Chamber has been an active contributor to government policy and legislation on protection of intellectual property rights (IPR). Our involvement is guided by two important principles:

• As a world-class city and knowledge-based economy, Hong Kong should adopt the highest standards in our respect for intellectual property rights.

• At the same time, as the freest and most competitive economy, Hong Kong must maintain its business-friendly and light-handed regulatory approach.

In applying these principles, it is important to make a distinction between those aspects of IPR protection which should be regulated by law, and those which should be better undertaken through advocacy and promotion. For instance, piracy and counterfeiting - which hurts IPR owners as well as undermine Hong Kong¡¦s reputation - should be dealt with by the law (and in our view, by a very stringent and punitive regime), whereas while education and awareness would be areas for which the law is not an appropriate tool.

The current consultation is being undertaken against the background of contentious debate and often heated arguments over the course of the past two years. We compliment the HKSAR government for its open minded attitude in approaching the problems. We appreciate the complexity of the issues and the difficulty in reaching a consensus, but we believe such a consultative process is important in the development of the Copyright Ordinance for Hong Kong.

Detailed comments

Chapter 1: Criminal provisions related to end-user piracy

Applying the principles described above, we believe it important to first establish the activities for which criminal sanction is required, before considering the detailed questions in the consultative paper. In this regard, the Chamber's position has been cleared spelled out in our previous submissions. In summary, we strongly support the use of criminal sanctions to combat genuine infringement of copyright in the course of business. This is crucial for Hong Kong to become an innovation-driven, knowledge-based economy. But that also means criminal sanctions should be applied only selectively.

The scope of application of criminal sanctions has been extensively debated in the course of the enactment of the Copyright Amendment Bill and the subsequent Suspension Bill. We believe the limited application is reasonable and the scope (i.e. computer programmes, visual or audio recordings of music or songs, television dramas and movies only) and reflects the needs of Hong Kong.

We are of the view that the most expedient way to define clearly what constitutes criminal behaviour would be to make the Copyright (Suspension of Amendments) Ordinance 2001 permanent. This will give a clear definition of the intent of the criminal sanctions.

Our comments on the specific questions are as follows.

1. whether criminal sanction should apply to the possession of an infringing copy of a copyright work in "business" activities of a non-profit-making nature;

Provided that the criminal sanction is limited to the narrower scope proposed above, there should be no distinction between business organisations and non-profit bodies. Schools and non-profits should abide by the law in the same way as profit making bodies, given the intent of the law to penalise genuinely criminal activities.

2. whether employees in possession of an infringing copy supplied by the employer for use in business should be criminally liable;

Likewise, employees and employers alike should abide by the law ¡V provided that the intent of the law is clear and its scope well-defined. Given that condition, if employees break the law they should be liable.

3. whether end-user criminal liability should apply only to copyright works afflicted by rampant piracy;

Criminal liability is a very serious legal tool, which should be used sparingly and should be resorted to in very specific ways to address clearly defined problems of piracy. Hence we agree with the view that criminal liability should apply only when rampant piracy exists.

4. whether certain acts of the end-user which infringe copyright but which do not give the end-user any commercial advantage or private financial gain, should be exempt from criminal liability; and

It follows from our recommendation that we would agree with this view.

5. whether the phrase "in connection with" in the expression "for the purpose of, in the course of , or in connection with, any trade or business: used in the Copyright Ordinance as amended by the Amending Ordinance should be removed.

We agree with the removal of the said phrases.

Chapter 2: Permitted acts for educational purposes

1. the approach to be adopted for clarification of the meaning of "to a reasonable extent" and "passages" in sections 41 and 45 of the Copyright Ordinance;

2. if a statutory approach is to be adopted, the elements that should be covered in clarifying the meaning of the two expressions;

We support a more liberal approach in considering what is "reasonable" and in defining the manner and substance of copyright protection. Such a liberal attitude should be encouraged not only among the education sector but across the board.

In our view, our "creative industries" and our schools and other user groups are not parties in opposition whose conducts have to be regulated by law. Rather, they should be partners in strengthening Hong Kong's position as a knowledge-based economy. The Chamber, therefore, does not support defining "reasonableness" by law. Instead we encourage copyright owners and users such as schools to work out some self-regulatory guidelines on reasonableness.

3. whether the act of recording or copying permissible under sections 44 and 45 of the Copyright Ordinance should be permitted no matter licenses under licensing schemes are available or not; and

Our view on licensing schemes is that they are important elements of the self-regulatory approach which we support. As such they should be useful facilitators in promoting IPR protection. Given that role, they do not need to be over-protected by the law. The permission due to Sections 44 and 45 should apply irrespective of the availability of licensing schemes.

4. whether a new permitted act should be provided under the Copyright Ordinance to facilitate the uploading of copyright works to a school INTRANET for access within the school.

According to the consultative document, the legality of Intranet access "is not certain from a legal standpoint". But surely common sense dictates that access by teachers and students must be permitted, or the whole point of sharing information through Intranet will be defeated. This should be clarified in the current law, either through suitable explanation or interpretation or, if doubt remains, by clarifying it more explicitly under the Copyright Ordinance.

Chapter 3: Permitted acts for visually impaired persons

1. whether a new permitted act should be provided for the transcribing of works in the printed format into Braille, large-print, talking or other specialised formats by non-profit-making bodies for the exclusive use of visually impaired persons where no such transcriptions are commercially available in Hong Kong within a reasonable time or at a reasonable price; and

We believe it reasonable to allow this to happen. We see no reasonable ground for any copyright owner to take issue with the visually impaired.

2. whether the acts mentioned in paragraphs 3.1 and 3.2 above should be permitted no matter a licensing scheme is available or not for authorising those acts.

Likewise, the permission should apply irrespective of availability of licensing scheme.

Chapter 4: Permitted acts related to free public showing or playing of broadcast or cable programme

1. whether the statutory exemption in paragraph 4.2 above should be extended to cover all underlying copyright works included in the broadcast or cable programme; and

Our view is that the break-up of the collection of royalty into different groups in the course of the creative work - the service operator, the producer, the artist, the composer, the lyric writer - is a cumbersome and very inefficient way to administer the exploitation of IPR rights. The consumer pays one price for a film or a CD, not many payments to different parties. We thus support the exemption being granted.

2. whether the exemption should be extended to cover all public place where the broadcast or cable programme is shown or played except where goods or services are supplied at prices which are substantially attributable to the facilities afforded for seeing or hearing the broadcast or programme.

Likewise, we agree that the exemption should be so extended.

Chapter 5: Parallel importation of Copyright works other than computer software

1. whether the civil liability and criminal sanction against parallel importation of an subsequent dealing in all types of copyright work should be removed, and whether there should be any exception;

Hong Kong being a free port, we see the removal of sanctions as being long overdue. A possible exception is that of audio-visual products (film and music recording) for which their distribution is time-critical. The Chamber remains open on whether the sanctions should continue to apply to these audio-visual products.

2. if there should continue to be criminal sanction against parallel importation of and subsequent dealing in some types of copyright work, whether the current 18-month threshold should be reduced; and

In general, this will not arise if all sanctions are removed. For audio-visual products, however, our position remains open.

3. whether the civil liability and criminal sanction imposed on end-users of parallel imported copies of copyright works in business should be removed.

It follows from the above that we would support removal of these sanctions (with the possible exception of audio-visual products).

Chapter 6: Unauthorised reception of subscription television Programmes

1. whether criminal sanction against fraudulent reception of subscription television programmes should be introduced;

2. whether civil remedy against fraudulent reception of subscription television programmes should be introduced; and

In our view, a deception is involved in fraudulent reception. Moreover, the problem is becoming rampant if not curbed. We thus agree with the view that there should be both civil remedy and criminal sanction against fraudulent reception.

3. whether criminal sanction and civil remedy against the possession of an unauthorised decoder for commercial purposes should be introduced.

We also support this less stringent form of control.

Chapter 7: Licensing bodies

1. whether the Copyright Tribunal should be replaced with an arbitration system to adjudicate disputes between copyright users and licensing bodies; and

The Chamber's position is neutral. We see the merit of an arbitration system which could be used more proactively. On the other hand, we are not opposed to maintaining the current tribunal arrangement.

2. whether licensing bodies should be mandated to be registered and to publish their scales of royalty charges.

We welcome greater transparency of licensing bodies. We believe this should be achieved through a requirement in the Registration of Copyright Licensing Bodies Regulation for a code of practice to be established on collection and administration of royalties, which should be made public. This will enable the behaviour of the copyright licensing bodies to be monitored by the public and by users, within a self-regulatory framework.

Conclusion

The Chamber supports a tougher regime against criminal infringement like piracy. At the same time, it is a long standing position of the Chamber that respect for IPR is the hallmark of a mature civil society, which should be achieved more through developing a collective understanding of IPR than by imposing punitive sanctions.

An important weapon against IPR infringement is therefore to engender a more open market offering more choice for genuine products. In the final analysis, the rationale for IPR is not the protection of vested interests but of the wider social and economic interests - a creative society, an innovative workforce, a free market marked by diversity and plurality, and a respect for property rights and individual obligations. We believe this consultation is moving in the right direction.

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