Policy Statement & Submission

Introduction

In responding to the current consultation, the Chamber would like to begin by re-iterating two principles which we laid down at the outset when we commented on the same consultation in 2001:

· 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.

The current consultation embodies a wide range of issues. Some of these would require a strong legal regime for regulation, while others might be better left to the dynamics of the market. There is no uniform response to the different issues and our answers to the specific questions are as follows.

Chapter 1 Copyright exemption

(a) Whether a quantitative test should be introduced in the Hong Kong Copyright Ordinance to determine if the act of copying for research or private study purposes is fair dealing.

In our view, the most important consideration of what constitutes “fair dealing” and “fair use” is reasonableness and common sense. While a quantitative test may give some useful guidance, it may not always be workable, e.g. in the case of non-printed works. As courts have recognised, one should take into account the portion copied relative to the entirety of the copyright work, and ascertain whether that portion is the most original, creative and central element of the work.

Instead of setting forth quantitative indicators in the law books, it would be more appropriate to include them (such as “10%”) as part of a non-legal code of practice. This will help illustrate what may be regarded as “reasonable” or “fair”, without making them rigid quantitative standards.

(b) whether a non-exhaustive regime of copyright exemption based on the principles of fair dealing should be introduced in Hong Kong or whether we should maintain the current approach of exhaustively listing all the copyright exempted acts;

With technological development, we are doubtful if an exhaustive list can be possible, or even desirable, in the long run. On the other hand, the introduction of a non-exhaustive general fair use defense would represent a significant shift in Hong Kong's IPR regime, and might inadvertently create ambiguity in the law.

For the longer term, therefore, we would support a re-examination of the current approach. A possible model to explore would be to maintain the list of copyright-exempted acts but to make them a non-exhaustive list, under a non-exhaustive regime.

In the meantime, the current exhaustive listing of copyright-exempted acts can be maintained, but with the addition of a “catch-all” provision that takes into account the facts of each case. This will preserve clarity of the current regime while at the same time providing greater flexibility.

(c) if it is considered that a non-exhaustive regime based on the principles of fair dealing should be adopted, what the essential elements should be; and
(d) if it is considered that the current approach of exhaustively listing all the exemptions should be maintained, whether and how the current list of exemptions should be expanded bearing in mind a possible expansion in the scope of end-user criminal liability (see Chapter 2).

If a non-exhaustive regime is to be pursued, the factors listed in para 1.14 (b) and (c) of the consultation paper would appear to us reasonable.

Chapter 2 Scope of Criminal Provisions Related to End-user Piracy

Whether and how the scope of end-user criminal liability should be expanded to cover more types of copyright work in addition to computer programs, movies, television dramas and musical recordings.

The issue of end-user criminal liability has been debated extensively. We maintain our previous view of 2001 that criminal liability, as a very serious legal tool, should be used sparingly and only resorted to in very specific ways to address clearly defined problems of piracy. By implication, criminal liability should apply only when rampant piracy exists.

We believe the current limited scope of application (i.e. applying only to computer programmes, visual or audio recordings of music or songs, television dramas and movies) is reasonable and reflects the needs of Hong Kong.

Chapter 3 End-user Liability Associated with Parallel Imported Copies

(a) whether the existing criminal and civil liability pertaining to parallel imported copies should be relaxed;
(b) the extent to which the liability should be relaxed; and
(c) whether the existing period during which parallel imported copies will attract criminal and civil liability should be shortened, and if so, for how long.

The Chamber has taken a position of supporting de-criminalisation of parallel importation in general, while maintaining an open mind with regard to audio-visual products, considering the time-critical nature of these products and the need to support our local creative industries.

We maintain our position with regard to parallel importation in general. With regard to audio-visual products, we consider that it is time now to take a view on moving forward. We propose a balanced approach. On the one hand, to help the creative industries, we would support the retention of civil and criminal liabilities as currently provided. On the other hand, we propose that the liability-period be shortened from eighteen months to twelve months, to offer more flexibility to end-users.

Chapter 4 Defence for Employees against End-user Criminal Liability

(a) whether specific defence should be provided to employees found in possession of infringing copies provided by their employers for use in the course of their employment;
(b) the proposed employee defence as described in paragraph 4.2 of Chapter 4;

We do not agree with the proposal for specific employee defense. As a matter of principle, both employers and employees should abide by the law and the Government should avoid sending inconsistent signals to the community on the importance of IPR protection.

(c) the suggestion of some copyright owners in the software industry as described in paragraph 4.4 of Chapter 4; and

While we observe that “whistle blowing” by employees may help copyright owners, we do not believe encouraging this practice is the right way to help IPR protection. Unless there is clear threat to public interest (e.g. rampant piracy), measures that are likely to increase confrontation among employers and employees should not be encouraged.

(d) other means to address the concerns about the impact of the end-user criminal liability on employees required by their employers to use infringing copies.

We emphasise that our preferred means of promoting IPR protection is to balance interests through promoting understanding, cooperation and mutual interest between copyright owners and users, and between employers and employees, as shared key stakeholders. We are not aware of any instance where lower-level employees were unjustly targeted for enforcement or prosecution with respect to copyright infringement, and as mentioned above, we do not believe that a specific employee defense should be introduced.

Chapter 5 Proof of Infringing Copies of Computer Programs in End-user Piracy Cases

How the proof of infringing copies of computer programs may be facilitated in order to enhance effective enforcement of the end-user criminal liability provisions.

The Chamber is not in favour of heavy-handed measures such as imposing an additional legal requirement for IPR record keeping. It goes against the principle of business-friendly regulation, and will in any case be strongly resisted by small and medium enterprises.

Chapter 6 Circumvention of Technological Measures for Copyright Protection

(a) whether criminal sanctions against activities under section 273 of the Copyright Ordinance as set out in paragraph 6.2 of Chapter 6 should be introduced;
(b) whether the scope of section 273 should be expanded to cover devices or means designed to circumvent access control measures, and whether criminal sanctions should be introduced for the expanded section 273; and
(c) whether civil remedies and criminal sanctions against the act of circumventing copy-protection measures and access control measures should be introduced.

We do not condone circumvention of legal practices. However, we are not convinced that legal intervention would be necessary to the extent of criminalising the underlying technological development. Although it may be difficult to draw, there is a fine line between the act of circumvention and the technology that bring that about. In our view, the matter should best be left to the market to settle. If Section 273 were to be expanded, civil liabilities would provide enough redress.

Chapter 7 Rental Rights for Films

Whether the Copyright Ordinance should be amended to provide rental rights for copyright owners of films which include musical visual recordings and whether such rights should attract criminal sanctions.

We believe the rental rights provision should be rationalised, so that such rights apply also to audio-visual products (films as well as performance videos). Again, our support is limited to the provision of civil liabilities only. Introducing rental rights to audio-visual products will also help the development of our creative industries.

Chapter 8 Issues Relating to the World Intellectual Property Organization Internet Treaties

(a) whether we should grant commercial rental rights to authors of underlying works in phonograms;
(b) whether we should grant moral rights to performers with regard to their live aural performances or performances fixed in phonograms;
(c) whether we should grant commercial rental rights to performers over their performances fixed in phonograms; and
(d) whether we should amend the definitions of “performer” and “performance” in the Copyright Ordinance to make certain that they cover artistic works and expressions of folklore.

The Chamber does not have strong views on these specific issues, other than stating that as a matter of principle, we believe Hong Kong should adopt international best practices.