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Policy Statement & Submission

2008/08/29

Preliminary Proposals for Strengthening Copyright Protection in the Digital Environment Comments by the Hong Kong General Chamber of Commerce

2008/08/01

Introduction

1. When the Chamber commented on the Consultation Document on Copyright Protection in the Digital Environment in May 2007, we supported the establishment of "an appropriate regime to combat Internet piracy through a suitable legal framework, public education, effective enforcement and cross-sectoral cooperation." We are pleased that the proposals in the present consultation paper are generally in line with this principle advocated by the Chamber.

2. Our specific comments on the Preliminary Proposals are as follows.

Proposals arising from the previous consultation

(a) Introduce a right of communication covering all modes of electronic transmission for copyright works, with related criminal sanctions against the breach of this right

3. As stated in our previous paper, "we support the creation of an all-embracing right for copyright owners to communicate their works to the public. As a technologically neutral provision, it will help promote the development of the digital industry."

4. However, we also stated that the legal liability arising from such a right should not be onerous and should be limited in most cases to civil and not criminal liability. By contrast, the present consultation paper proposes that criminal sanctions apply in two defined circumstances, namely, (a) where communication is made for the purpose or in the course of business; or (b) where, other than for the purpose or in the course of business, communication is made by “streaming” the copyright work to the recipients and the communication is made to such an extent as to affect prejudicially the copyright owner.

5. As stated in our last submission, "in considering whether legal liability should apply, and the extent to which they should apply, the overriding principle must be that of reasonableness." While not ruling out criminal liability under appropriate circumstances, the Chamber's long-held view is that "criminal liability should be reserved only for cases of rampant piracy, such as those resulting in direct commercial advantage or are significant in scale."

6. With regard to the two situations in the present proposals, we remain to be convinced, but will keep an open mind as to whether they represent cases of rampant piracy which justify imposing criminal sanctions. We would be open to the possibility of imposing criminal sanctions if it could be convincingly demonstrated that infringement on a large scale could happen, which would not be adequately dealt with by other laws such as those on computer crime or fraud.

(b) Introduce a copyright exemption for temporary reproduction of copyright works by online service providers ("OSPs"), which is technically required for (or enables) the transmission process to function efficiently

7. The Chamber supported this proposal in the earlier consultation paper and is pleased that the government agrees with us.

(c) Facilitate the drawing up of a voluntary code of practice for OSPs in combating internet infringements, the compliance with which or otherwise will be prescribed in law as a factor that the court shall take into account when determining whether an OSP has authorized infringing activities committed on its service platform

8. In our last submission we proposed that government and industry should "join hands to develop a self-regulatory system, and introduce legislation only if self-regulation does not work", and we called for "a joint effort by various stakeholders including the copyright industry, the users, and the telecommunication operators", with the government as facilitator. We are pleased to see that this is indeed what is proposed now, through the establishment of a tripartite forum comprising representatives from OSPs, copyright owners and users to examine further options and to draw up a code of practice for OSPs.

9. We agree with the proposal to add weight to the code of practice without making it part of the law, by "amending the law such that compliance with the code of practice would be a factor that the court shall take into account in determining whether or not an OSP has authorized an infringement", thus providing incentives for OSPs to comply with the code of practice. Clearer delineation of what constitutes "authorization" would assist OSPs by providing greater certainty with respect to liability.

(d) Continue to rely on the "Norwich Pharmacal" principles, as opposed to introducing an alternative infringer identity disclosure mechanism that is not subject to scrutiny by the court

10. In our last paper we stated our opposition to additional legislation on disclosure: "it will only bring about additional bureaucracies and procedures and is a very uncreative method of regulation unbefitting of business in the digital era." We are pleased that this view is shared by the government. In the same spirit, we welcome further steps to be taken by the government, as stated in the Consultation Paper, to "further discuss with stakeholders to explore opportunities for streamlining the disclosure mechanism". Such a streamlining could usefully reduce the business community's cost of using these legal processes.

(e) Prescribe in law additional factors to assist the court in considering the award of additional damages, in lieu of introducing statutory damages for copyright infringement actions

11. In our previous paper we stated that "statutory damages will provide certainty and enhance efficiency of the legal process, hence we support providing for such remedies under the law." In lieu of statutory damages, it is now proposed that three additional factors be specified including the conduct of the defendant after the infringing act (e.g. attempts to disguise infringements), the possible widespread circulation of the infringing copy, and the need to deter similar infringements, to assist the court in considering the award of additional damages. This is acceptable to us and we find the three factors reasonable.

(f) Refrain from introducing new criminal liability pertaining to unauthorised downloading and peer-to-peer (P2P) file-sharing activities

12. This proposal has our support. It is consistent with our position that criminal liability should only apply in serious and rampant cases.

New issue – Media shifting

13. Although not covered in the previous consultation, the present paper proposes that a new exception be provided to allow media-shifting and format-shifting by end-users for personal and private use. We consider the exception reasonable for certain types of copyrighted content where media-shifting has, in practice, already become a way of life (e.g. copying a CD onto an iPod). However, as this is a comparatively new area, we advise the Government to proceed with caution and would welcome more information, e.g. on the practical experience elsewhere, on finding the most appropriate way forward.

14. On the extent to which exception should apply, again, this should be guided by the principle of reasonableness, with two over-riding considerations. Firstly, the user should have legitimate ownership of both the original copy and the device holding the media-shifted copy. Secondly, the purpose of the media/format shift should be limited to personal and private use only. Again, industry, consumers and users should all benefit from further information and discussion.

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