China: Consultation On Treatment Of Parody Under The Copyright Ordinance – Still Ongoing

Last Updated: 2 April 2014
Article by Eugene Low and Diana Tsang

The existing Copyright Ordinance of Hong Kong is largely modelled on the Copyright, Designs and Patents Act 1988 of the UK. In order to keep pace with the rapid technological development in the digital environment, the Hong Kong government has been attempting to make various changes to the Copyright Ordinance. In 2006, the Hong Kong government issued a consultation paper, "Copyright Protection in the Digital Environment". Following extensive consultation, a Bill was introduced in June 2011. Among other proposed changes, the Bill sought to introduce a technology-neutral communication right which would make it an offence for any person to communicate a copyright work to the public without authorisation for the purpose of any trade or business or to such an extent as to affect prejudicially the copyright owner.

While parody was not a subject that was expressly addressed during the consultation process or in the Bill, the legislative process was derailed by debates on the treatment of parody when the Bill was tabled before the Legislative Council during the legislative year of 2011-2012. End-user groups voiced their concerns that by criminalising certain acts of communication of copyright works, the Hong Kong government was creating a threat to parody and other user-generated content on the Internet. They claimed that parody is a means to express creativity and usually causes little or no economic harm to the copyright owner. Hence, they proposed a special exemption for parody use of copyright works from the civil and/or criminal liabilities under the Copyright Ordinance.

Under the existing Copyright Ordinance, there is no special treatment or exemption for parody. The term "parody" is not defined in the Copyright Ordinance and there has been no case law in Hong Kong which may cast light on the meaning of the term. It is generally considered that "parody" may encompass satire, caricature and pastiche. While the current Copyright Ordinance provides exemptions for certain fair dealing acts that may apply to parody (such as fair dealing with a work for the purpose of criticism or review), there appears to be a misconception that parody does not attract criminal liabilities under the current law – in fact, the unauthorised distribution of infringing copies of a work, regardless of whether such copies amount to parody use, will be an offence so long as the distribution is for the purpose of any trade or business or to such an extent as to affect prejudicially the copyright owner.

At the other end of the spectrum, copyright owners are keen on protecting their legitimate interests in the digital environment and are concerned with the potential uncertainties and abuse that any special treatment for parody may bring.

Consultation Paper on Treatment of Parody

In light of the concerns about the treatment of parody, the Hong Kong government launched a three-month public consultation on this topic in July 2013. In the Consultation Paper, the government put forward three options to deal with parody in the new Copyright Ordinance:

Despite the fact that the consultation period was extended for one month to November 2013 and over 2,000 submissions were received by the Hong Kong government, none of the three options gained majority support from the public. The only consensus that was apparently achieved was that non-commercial parodies should be afforded some kind of exemption.

The Legislative Council Panel on Commerce and Industry (the Panel) further met in December 2013 to discuss the results of the Consultation and the way forward. In particular, the following new proposals were tabled for discussion:

i. Introducing a copyright exemption for non-profit-making user-generated content (UGC) or for UGC not used in the course of trade, as put forward by the Copyright and Derivative Works Alliance.

ii. Introducing a criminal exemption for parody (without any fair dealing exception), which focuses on whether "the use of the original copyright work is solely for noncommercial purposes and the parody is not a substitute of the original underlying work", and whether "the use has the potential to cause an unreasonable loss of income to the copyright owner and whether the purpose and character of the unlicensed use is of parody nature". This proposal was suggested by the Hong Kong Copyright Concern Groups.

It is worth bearing in mind though that the Panel would observe the following guiding principles when considering the various proposals:

a. A fair balance between protecting the legitimate interests of copyright owners and other public interests, such as reasonable use of copyright works and freedom of expression, should be maintained.

b. Any criminal/civil exemption to be introduced must be fully compliant with Hong Kong's international obligations such as Article 61 of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement) and the "three-step test" requirement under Article 13 of TRIPS Agreement.

c. Any proposed amendment to the Copyright Ordinance must be sufficiently clear and certain so as to afford a reasonable degree of legal certainty – this means that, for instance, the definitions of key concepts such as "parody" or "UGC" must be sufficiently clear.

The Panel recently issued a discussion paper to facilitate a further round of discussion scheduled for March 2014. The discussion paper has set out the principal direction for moving this agenda forward:

i. Through a detailed analysis of the various types of work commonly found on the Internet nowadays, the Panel would seek to particularise a specific scope that warrants special treatment, for example, altered pictures/videos/posters and mash-ups. However, the Panel pointed out that such works, if they are created in response to current events, could have been already covered by the existing fair dealing exception for reporting current events. On the other hand, for altered pictures/videos/posters created for other purposes, the works are generally playful and parodic in tone and would unlikely be a substitute for the original works. The Panel did not conclude on a suitable scope for special treatment in the discussion paper.

ii. Subject to identifying a possible scope to be particularised for special treatment, the Panel proposed to invite the court to undertake a fairness assessment to determine whether an act in question may conflict with a normal exploitation of the original copyright work and unreasonably prejudice the legitimate interests of the copyright owner. To this end, the Panel has suggested a non-exhaustive list of relevant factors for the court to consider:

a. The purpose and nature of the dealing, including whether the dealing is non-profitmaking or belongs to a commercial nature;

b. The nature of the work;

c. The amount and substantiality of the portion dealt with in relation to the work as a whole; and

d. The effect of the dealing on the potential market for or value of the work.

iii. The Panel considered Option 1 (as explained above) to be useful in addressing users' concerns about criminal liability as it would clarify the threshold for criminal enforcement for all subject matters without confining to a particular type of use. Having considered the public's concerns regarding Option 1, the Panel proposed to consider possible refinement to Option 1, such as laying emphasis on whether the infringement would amount to a substitution for the original copyright work for the court to assess possible criminal liability. The Panel pointed out that, with a refined Option 1 that would apply to all types of uses or purposes, a narrow criminal exemption for a certain genre would be superfluous.

iv. The Panel had reservations in giving special treatment to UGC for two reasons. First, UGC is a wide and vague concept which cannot be clearly defined to satisfy the "threestep test" requirement under TRIPS Agreement. Second, the Panel considered that with a refined Option 1, UGC – which normally does not amount to a substitute for the original copyright work – would unlikely be caught by the criminal net.

v. Lastly, the Panel pointed out that the proposed introduction of safe harbour provisions to limit online service providers' liability for copyright infringement on service platforms caused by subscribers would provide an efficient and effective mechanism for rights owners to deal with trivial infringement cases. With such a mechanism in place, rights owners would be unlikely to initiate civil proceedings in cases of trivial infringement.

In the meantime, concerned groups have intensified their lobbying in Hong Kong urging the government to re-introduce the Copyright Bill without delay

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