On 27 April 2005, the Hong Kong Government announced that it had brought criminal charges against a Hong Kong man for illegally sharing three files containing Hollywood movies on the Internet using BitTorrent technology. The man was arrested in January 2005 and subsequently released until the criminal charges were formally laid in April 2005.
Under the Copyright Ordinance, a person who distributes an infringing copy of a copyright work without authorisation commits an offence. If convicted, the maximum penalty carries a fine of HK$50,000 per infringing copy and four years' imprisonment. The man pleaded not guilty at the first court appearance on 28 April 2005.
Around the same time, on 27 April 2005, the Hong Kong and Kowloon Motion Picture Industry Association announced the launch of a campaign against Internet users engaging in illegal sharing of local movies over the Internet. This campaign was spurred by the discovery that a large number of files containing two Cantonese films, the House of Fury and The Eye:10 were being illegally shared over the Internet shortly after their commercial release in Hong Kong over Easter.
With such actions, Hong Kong has joined a growing rank of jurisdictions in which music and movie industry stakeholders are campaigning against file-sharers. The stakes are high. The Motion Picture Industry Association estimates that over US$50 million in revenue was lost in 2004 due to illegal copying and sharing of local movies over the Internet.
Although actions have been taken against file-sharers in many countries, because of variations in different provisions in national copyright laws the decisions rendered so far have varied. For example, in Canada, the Federal Court in BMG Canada Inc. and others v. Doe and others, 2004 FC 488 held that downloading of a song for personal use does not amount to infringement under Canada's Copyright Act, while in the UK where there is no personal use exemption, and the private study or research exemption does not apply to films and sound recordings, the British Phonographic Industry has recently made headlines with its actions and victories against file-sharers, and court orders requiring ISPs to disclose the identities of suspected file swappers.
Issues for Hong Kong
The adequacy of provisions in the Copyright Ordinance when it comes to file-sharing is yet to be tested. Some of the legal and evidential issues likely to be faced by Hong Kong courts when dealing with file-sharing cases under the Copyright Ordinance include the following:-
- Do unauthorised uploading and downloading of copyrighted works on file-sharing networks constitute copyright infringement attracting civil and criminal liability?
- Is there any "fair dealing" exemption available as a defence to the act of file-sharing ?
- Can a causal connection between an IP addresses, a user's pseudonym and a potential defendant be established ?
- Could Internet Service Providers ("ISPs") be compelled under the law to disclose information related to their customers ?
- Could ISPs be held liable for infringement of copyright?
Uploading and downloading
The act of unauthorised copying of a copyright work including the reproduction of such work in whole or in part in any medium by electronic means is restricted under the Copyright Ordinance. The unauthorised uploading and downloading of music, movies or software files via Internet file-sharing networks constitutes copyright infringement and attracts civil liability under the Copyright Ordinance.
File-sharing technology such as BitTorrent works in such a way that as one downloads a file, the downloader simultaneously uploads a part of the downloaded file to all other users who are requesting that file on the same network. The significance is that the downloader is strictly speaking "distributing" part of the downloaded file to other users and consequently, the downloader may be subject to criminal liability in addition to civil liability.
The Canadian Federal Court in BMG Canada Inc. and others v. Doe and others, 2004 FC 488 commented that the making of a copy so that it is accessible on a shared file directory for others to download is not the same as "distributing" per se. It is accepted that Canadian copyright legislation is different, but the file-sharing technology considered in that case was also different from the BitTorrent technology used by the Hong Kong man arrested in January 2005.
When using BitTorrent technology, an initial uploader (or seeder) must first perform a positive act of creating on a web server a .torrent file containing information about the music or movie file and a link to a "tracker" which enables downloaders to connect to each other in order to download the file. This setup is not required in other file-sharing systems such as KaZaa and iMesh which were the systems at issue in the BMG Canada Inc. case. It is arguable that the creation of a ".torrent" file and its posting on a web server indicates an uploader's positive act of distribution.
Are exemptions available?
In Hong Kong, fair dealing exemptions are only available for research, private study, educational and library archival purposes. Unlike in the Canadian Copyright Act, there is no "private use" exemption under the Hong Kong Copyright Ordinance and therefore, the unauthorised downloading of movie or music files for private use is illegal.
Unlike in the UK, in Hong Kong the private study or research exemption does apply to all categories of copyright works and therefore includes films and sound recordings. Although the exemption is recognised to be very narrow in scope, some defendants in file sharing actions are likely to try to rely on it in any event.
Disclosure by ISP and causal connection between IP addresses, the users' pseudonyms and infringers
A practical issue for rights owners is that while it is relatively easy to obtain IP addresses of file-sharers, as plaintiffs they will need more than that in order to be able to bring either a criminal or a civil action. Rights owners need the assistance of ISPs to match an IP address with an actual legal person. In most countries, copyright legislation does not impose an obligation on ISPs to disclose such information to rights owners. In common law countries, rights owners may seek an order requiring the disclosure of identity of a defendant from a third party. Such an order is commonly referred to as a Norwich Pharmacal Order. Its principles are based on the English case Norwich Pharmacal Co. v. Customs and Excise Commissioner  A.C. 133 which dealt with the issue of pre-action discovery by a plaintiff to ascertain the identity of a defendant.
The Canadian Federal court held in BMG Canada Inc. and others v. Doe and others, 2004 FC 488 that the test for granting an order compelling ISPs to disclose information about an alleged unknown infringer is as follows:-
- the applicant must establish a prima facie case against the unknown alleged wrongdoer;
- the person from whom discovery is sought must be in some way involved in the matter under dispute, he must be more than an innocent bystander;
- the person from whom discovery is sought must be the only practical source of information available to the applicants;
- the person from whom discovery is sought must be reasonably compensated for his expenses arising out of compliance with the discovery order in addition to his legal costs; and
- the public interests in favour of disclosure must outweigh the legitimate privacy concerns.
Whilst requirements 1, 2 and 4 should not be difficult to meet, satisfying requirements 3 and 5 is likely to be practically more difficult. For requirement 3, rights owners would need to explain why the identity of an unknown infringer identified by an IP address cannot be obtained from other sources. As far as requirement 5 is concerned, the court would need to balance a defendant's privacy rights against the rights of rights owners and the public interest.
It was noted in BMG Canada Inc. that there has not been any case in which privacy or other concerns outweighed the interest of a plaintiff in obtaining documents and information necessary to identify the defendants. In other words, privacy cannot be used as a shield to protect a person from civil or criminal liability.
The recent court orders in the UK granted to the British Phonographic Industry for the disclosure by ISPs of identities of file-sharers, are likely to hold some authority in Hong Kong.
As a further practical point, rights owners are advised to bring their applications as soon as possible after having obtained the IP addresses as such a request may be refused by the court if there is delay on the grounds that the data supplied may no longer be reliable and could lead potentially to the erroneous identification of defendants. Added to this, there is the risk that ISPs may not necessarily hold sufficiently detailed information to associate a particular customer to an IP address at any particular time as there is no legal obligation for ISPs to keep such information.
Rights owners would also need to provide detailed information on how an infringer's pseudonym was linked to a particular IP addresses. Without such information, the court may consider that the particular IP addresses provided by the plaintiff are not reliable.
Can ISPs be held liable for copyright infringement?
As long as infringing copies of movies and sound recordings are merely transmitted through an ISP's facilities and are not stored on its servers, an ISPs can rely on the defence in Section 26(4) of the Copyright Ordinance. This defence is simply that the mere provision of physical facilities which enable the making available of copies of works to the public does not of itself constitute an act of making available of copies of works to the public.
This deals with primary infringement. Would ISPs be liable for secondary infringement in Hong Kong? Section 32(2) of the Copyright Ordinance provides that a person may be liable for copyright infringement, if it transmits a copyright work by means of a telecommunication system if it has knowledge that infringing copies of such work will be made by means of reception of such transmission. This provision will no doubt cover the action of the "seeder" of illegal files and may well be found sufficient to attract liability for an ISP that has been put on notice of the acts of a particular "seeder" and which chooses not to do anything about it.
In such situations ISPs may well decide to block the Internet access of "seeders" or suspected infringers. This in turn poses interesting issues relating to contractual risks for ISPs who might be challenged by customers if their Internet access is blocked. To guard against such risks, ISPs would need to revisit their contractual arrangements. See Goetz Trading Ltd v Pacific Supernet Ltd  HKEC 1218 DCCJ 5427/2002.
The upshot of all this is that while an ISP will not be held liable for primary infringement of copyright for making available infringing copies to the public an ISP is exposed to the risk of secondary infringement of copyright if it continues to allow a "seeder" or a customer identified by the relevant IP address as having engaged in infringing activities, to have access to the Internet once the ISP has been notified of the infringing activities.
The adequacy of the provisions in the Copyright Ordinance in Hong Kong when it comes to illegal P2P file-sharing activities over the Internet is to be tested in the coming year.
In the meantime, various industry groups have lobbied the Government for the inclusion of provisions in the legislation requiring ISPs to retain records that enable the matching of IP addresses to legal persons.
On 29 April 2005 the Hong Kong Government announced that it had been holding discussions with ISPs concerning certain voluntary guidelines to deal with the disclosure of information by ISPs. This signals a compromise position with no changes to the legislation as such but rather the adoption of certain guidelines for ISPs, a move which will no doubt attract both praise and criticism from different quarters.
© Gabriela Kennedy and John Tai
The authors are partner and solicitor respectively practising in the IP/TMT Group of Lovells in Hong Kong and can be contacted by e-mail at firstname.lastname@example.org and email@example.com respectively.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.