Hong Kong: Copyright Report 2006

Last Updated: 27 March 2007
Article by Gilbert Collins

Copyright Ordinance

1. The long awaited Copyright (Amendment) Bill 2006 was gazetted on 17th March 2006 and had its’ First Reading in the Legislative Council on 29th March 2006. Some of the major proposals of the Bill are as follows:-

a. The business end-user criminal liability for the use of infringing copies of copyright works in respect of computer programmes, movies, television dramas and musical recordings will be made permanent.

b. A new business end-user criminal offence of " making for distribution or distributing infringing copies of a book, a magazine, a periodical or a newspaper on a regular or frequent basis ". Educational establishments which are non-profit making and subvented by the Government are exempted. There are also statutory defences which are (i) the user made request for a licence but failed to receive a timely response; (ii) the user could not obtain commercially available copies and could not obtain a licence on reasonable commercial terms; and (iii) the user did not know that the copies he made or distributed infringed copyright.

c. Where a company or partnership commits an act which constitutes a business end user criminal offence its’ Directors or partners who are responsible for internal management of the company or partnership can be prosecuted. In the absence of such a director or partner, any persons under the direct authority of the director or partner and is responsible for the internal management can be prosecuted.

d. It is proposed that professionals such as lawyers and persons providing investigation services will be exempted from the business end-user possession criminal liability. A statutory defence will also be available to employees who were not in a position to make or influence a decision regarding the acquisition of the infringing copy of a copyright work.

e. The controversial words "in connection with" will be deleted from the phrase "for the purpose of, in connection with, any trade or business" throughout the whole of the Copyright Ordinance so that activities incidental to or marginally related to business will not attract any civil or criminal liability.

f. It will be a criminal offence for any person to be engaged in commercial dealing of circumvention tools or provide circumvention services in a circumvention business. There will also be civil remedies against any person who deals in circumvention tools or provides circumvention services and such activities do not have to be in a commercial context.

g. Copyright owners will be able to take action against any persons who offers films or comic books for commercial rental to the public without the consent of the copyright owner.

h. The criminal liability period for commercially dealing in or importing any parallel imported copyright work (except computer program) will be shortened from 18 months to 9 months. The civil and criminal liability for importation and possession of parallel imported copies of copyright works by business end-users is proposed to be abolished except in respect of movies, TV dramas, musical sound recordings, and musical visual recordings acquired for playing or showing in public.

i. A new exemption for fair dealing with a work for the purposes of education or public administration is proposed.

2. No date has yet been set for the Second Reading of the Bill.

3. The suspension of end-user criminal liability for the use of infringing copies of copyright works in business which are not computer programmes, movies, television dramas and musical recordings continues to take effect up to 31st July 2007 or until the Copyright (Amendment) Bill 2006 is enacted, whichever is the earlier.

The work of the Customs and Excise department in Hong Kong

4. According to the statistics released by the Customs department, between 1st January 2006 to 30th June 2006, the department handled 3,977 copyright cases, 489 persons were arrested/summonsed and the total estimated value of seizures during that period was HK$55.4m. Compared to the same period in 2005, whilst the number of cases dropped by 22.5% the number of persons arrested/summonsed only decreased by 2.8% and the estimated value of seizures decreased by 7.7%.

5. Below are some of the more interesting or significant cases which the Customs & Excise department have handled in the past year:-

a. Three hair salons belonging to the same chain which provided VIP services to its’ customers by allowing them to play TV games and watch movies in a VIP room for an additional charge were raided by Customs in October 2005 on suspicion that they had been providing pirated games CD and VCDs for use by customers. 182 pirated film VCDs, 42 pirated music CDs, 14 pirated TV game CDs, a TV game machine and audio equipment were seized. This is the first case dealt by Customs in which hair salons were found possessing infringing copes in the course of conducting business.

b. The Anti-Internet Piracy division of the Customs department arrested an owner and staff of a company in May 2006 for setting up a website selling infringing Japanese cartoon movies and animation discs. The owner was convicted and sentenced to six months imprisonment and the staff was convicted on two counts and sentenced to three and fours months imprisonment, to run concurrently. The sentences passed were the heaviest so far for sale of infringing discs via the internet. According to the Customs Department, since the Anti-Internet Piracy Team was established in 2000, 59 cases have been cracked resulting in the seizure of more than 94,000 pirated discs and 3,700 pieces of counterfeit goods, worth more than HK$4 million and arrest of 69 men and 25 women.

c. A Chinese restaurant was found to have been involved in corporate piracy. In November 2005, Customs officers raided the Chinese restaurant seizing three sets of servers installed with karaoke video files, 18 sets of computer and a batch of audio visual equipment to the value of HK$300,000. The Chinese restaurant and its’ sixty year old director were fined HK$20,000 and HK$10,000 respectively. According to the Customs department since the amended Copyright Ordinance came into force on 1st April 2001, Customs officers have cracked 37 corporate piracy cases in relation to the use of pirated audio-visual copyright works in the course of business.

d. In August 2006 a woman and two men were sentenced to imprisonment ranging from 33 to 55 months for operating a pirated disc replicating workshop, three storage centres and eight retail stores. 50,000 pirated discs, three sets of replicating machines, 11 sets of computers and two sets of high speed copiers/printers were seized. The estimated value of the seizure was HK$1.5 million.

e. Illicit copy shops took advantage of the start of the new school year this September. In September 2006, Customs raided three copy shops and a storage centre. Seven photocopiers, three book-binding machines and 225 photocopies of books were seized. The books seized related to university and A-Level reference books and primary school level exercise books.

Recent cases in 2005/6

6. Cinepoly Records Co. Ltd & others v. Hong Kong Broadband Network Ltd & Others HCMP 2487/2005date of judgment 26 January 2006

This was an action brought by leading music producers against internet service providers for discovery of the names, id numbers and addresses of 22 alleged online copyright infringers. This case is significant in that it is the first ever action by music producers against internet service providers for discovery of personal data within the meaning of the Personal Data (Privacy) Protection Ordinance, Cap.486. The data sought was also subject to confidentiality provisions within each of the defendants’ licences granted by the Telecommunications Authority.

The issues in contention were:-

a. Whether discovery would be granted when the information sought was personal data within the meaning of the Personal Data Ordinance; and

b. If granted, whether the defendants would be in breach of the confidentiality provision within their licence.

The court had the delicate job of striking a balance between the administration of justice and protection of privacy relating to personal data.

Personal Data

The Personal Data (Privacy) Protection Ordinance gives protection to individuals in Hong Kong in relation to their personal data. The protection is not absolute and there are exemptions. The relevant exemption section the subject of discussion in this case was section 58 of the Ordinance.

Section 58(1)(d) provides as follows:-

"(1) Personal data held for purposes of-

……………

(d) the prevention, preclusion or remedying (including punishment) of unlawful or seriously improper conduct, or dishonesty or malpractice, by person;

…………….

Are exempt from the provisions of data protection principle 6 and section 18(1)(b) where the application of those provisions to the data would be likely to-

(i) prejudice any of the matters referred to in this subsection; or

(ii) directly or indirectly identify the person who is the source of the data.

(2) Personal data are exempt from the provisions of data protection principle 3 in any case in which-

(a) the use of the data is for any of the purpose referred to in subsection (1)(and whether or not the data are held for any of those purposes); and

(b) the application of those provisions in relation to such use would be likely to prejudice any of the matters referred to in that subsection,

And in any proceedings against any person for the contravention of any of those provisions it shall be a defence to show that he had reasonable grounds for believing that failure to so use the data would have been likely to prejudice any of those matters.

………………………"

The judge held that "… unlawful or seriously improper conduct…." extended beyond criminal conduct to include civil wrongs and that included tortious conduct such as copyright infringement. Further, the use of the data was clearly for the purpose of prevention, preclusion or remedying of the copyright infringements of the plaintiffs’ musical works.

Confidentiality

Within the individual licenses of each of the defendants with the Telecommunications Authority there is a clause to the effect that "Licensees shall not disclose information of a customer except with consent of the customer….for the prevention or detection of crime or the apprehension or prosecution of offenders or except as may be authorized by or under law."

In interpreting "…as may be authorized by or under law.." the judge held that there could be no breach of such a clause where the defendants were made to disclose the data pursuant to a court order made.

The judge concluded that granting the relief sought would not have the effect of compelling the defendants to act in breach of either the Personal Data (Privacy) Ordinance or their duty of confidentiality under their licence. An order against the defendants for discovery of the data sought was thus granted by the judge.

The plaintiffs were ordered to pay the defendant’s costs of the action on an indemnity basis and costs of compliance with the order on an indemnity basis and reimburse the defendants for all other reasonable cost of compliance of the order.

7. Cinepoly Records Co. Ltd & others v. Hong Kong Broadband Network Ltd & Others HCMP 943/2006 date of judgment 28 August 2006

The judge in this case agreed with the ruling in the earlier case of HCMP2487/2005 and granted an order to the Plaintiffs for the disclosure by the Defendants of the full names, postal addresses and identity card numbers of 49 internet account subscribers suspected of online copyright infringement.

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.

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