Originally published July 15, 2011

Keywords: Copyright amendment bill, copyright protection, HKSAR, online service providers, OSPs

The HKSAR Government tabled the Copyright (Amendment) Bill 2011 (the "Bill") at the Legislative Council in June 2011. It has three key objectives: (i) to ensure the Hong Kong Copyright Law copes with the rapid technological advances in this digital age; (ii) to facilitate cooperation between copyright owners and online service providers ("OSPs") in combating online infringement; and (iii) to support reasonable use of copyright works via computer networks, e.g. e-learning.

Since the first public consultation in December 2006, the Government has considered different proposals of copyright reform and sought to balance the copyright owners' commercial interests and the public's expectation to have unrestricted flow of information. For details regarding the consultation discussions, please refer to our email alert "Copyright Reform in Hong Kong" dated 9 December 2009 (http://www.mayerbrown.com/publications/article. asp?id=8265&nid=6) .

The major proposals in the Bill cover the following:

1. Introducing right of communication to the public, with criminal sanctions against infringement

To facilitate copyright owners to exploit and share their works electronically, the Government introduces this technology-neutral right to broaden the protection of copyright works communicated via any mode of electronic transmission (e.g. uploading to a public or private forum or posting on social media such as facebook). The right of communication is defined broadly and intends to cover not only the current specific modes of transmission, namely to "broadcast" a copyright work, to include it in a "cable programme service" and to "make it available" to the public by wire or wireless means, but also other existing and future means of electronic transmission.

It should be noted that a person who does not determine the content of the communication would not be treated as communicating a work to the public. Hence the transmission of copyright works by OSPs and intermediaries through automated processes will not be regarded as a communication under the Bill.

Criminal liability will be imposed on a person who, without authorisation, communicates a copyright work to the public. Such liability is not confined to conduct in the course of business for profit, but also where it is made to such an extent as to affect prejudicially the copyright owner unless that person proves that he has no actual or constructive knowledge of the work being an infringement.

The public has expressed concerns about the potential restriction of freedom of expression this catch-all right of communication may cause. If the Bill is passed, political parodists who make poke fun on others' photos or lyrics over the social networking sites may have to face criminal sanctions.

2. Introducing safe harbour provisions for OSPs

The Bill seeks to introduce new Sections 88A to 88I to provide for a statutory regime to limit OSPs' liability (i.e. waiving their liability for damages or any other pecuniary remedy) in copyright infringement that has occurred on their online platforms. OSPs are not required to actively monitor their platforms or services and remove or disable access of suspected infringing materials on their own initiatives. To benefit from the safe harbour provisions, an OSP has to satisfy the following conditions:

i. It must adopt a notice and take-down policy and take reasonable steps to limit or stop the infringement as soon as practicable after it received a notice of the alleged infringement, or became aware of an infringement or otherwise became aware of circumstances that would inevitably lead to a conclusion that there is an infringement.

ii. It must designate an agent to receive notice of alleged infringement by specifying the agent's name, address, telephone number and email on its website.

iii. It must not receive any financial benefit directly attributable to the infringement. References have to be made to the accepted industry charging practice for providing similar online services. An unreasonably high service fee of an OSP may suggest that it is receiving a monetary benefit attributable to the infringing activities carried out through its online platform.

iv. It must accommodate and not interfere with the technical measures adopted by copyright owners to identify or protect their copyright works.

The Bill has laid down a basic framework of notification system for reporting infringement whilst the detailed guidelines and procedures are expected to be complied into a Code of Practice by the industry players. In a nutshell, the Bill proposes that upon receiving a notice of alleged infringement (provided that such notice duly complies with the formality and content requirements in the proposed new Sections 88C(2) & (3)) ("Notice"), the OSP may send a copy of the Notice to the relevant online service subscriber and notify him that the subscriber may contact the complainant directly. Upon satisfying that the material is infringing or the circumstances would lead inevitably to the conclusion that there is an infringement, the OSP should take down the material or disable access thereto and notify the subscriber in writing. The subscriber may file a counter notice (in compliance with the proposed new Sections 88D(4) & (5)) ("Counter-Notice") disputing or denying infringement and requesting for reinstatement of the material.

To robustly and fairly enforce this Notice system, the Bill proposes that anyone who makes a false statement in the Notice or Counter-Notice commits an offence and will be liable for paying compensation by way of damages to the persons suffered as a result of his false statement.

Further, the proposed new section 22(2A) provides that in determining whether a person has authorised another to do any of the infringing acts, the court may take into account all circumstances and in particular (i) the extent of that person's power to control or prevent the infringement; (ii) the nature of the relationship between the two persons; and (iii) whether that person has taken any reasonable steps to limit or stop the infringement. Therefore, so long as an OSP does not have censorship or otherwise exercise control over the materials posted or transmitted via its servers and strictly adheres to the take-down policy in compliance with the safe harbour provisions, the OSP will unlikely be held liable for infringement.

3. Introducing a copyright exception for temporary reproduction of copyright works by OSPs

A new section 65A is proposed to be added to give OSPs an exception for making and storing temporary copies of copyright works to enable them to undertake caching activities which are technically required provided that (i) the sole purpose is to enable more efficient transmission of the work through the network; (ii) it is an automatic and essential part of the technological process and that process does not modify the copyright work or interfere with the use of the work; (iii) the storage is temporary; and (iv) the OSP complies with the standard industry obligations in updating the database in which the copy is stored, assessing the work and promptly removing the temporary copy when the original source is no longer available.

4. Prescribing the factors for considering what amounts to distribution to such an extent as to affect prejudicially the copyright owner

In the famous big-crook case where films were illegally distributed via BitTorrents, the court interpreted the term "affect prejudicially" widely and this has given rise to a lot of discussions and some disagreement. The Bill now provides for a nonexhaustive list of factors in determining whether the copyright owner's interest has been affected prejudicially by the distribution of an infringing copy. The court may take into account all circumstances and in particular (i) the purpose of the distribution; (ii) the nature of the work, including its commercial value; (iii) the amount and substantiality of the portion copied that was distributed; (iv) the mode of distribution; and (v) the economic prejudice caused to the copyright owner, including the effect on the potential market for or value of the copyright work.

5. Prescribing additional factors for considering the award of additional damages

The Government refuses to introduce statutory damages but seeks to add two new factors that the court may consider in awarding additional damages in copyright and performer's right infringement. Apart from the existing factors, namely (i) the flagrancy of the infringement; (ii) the benefit accruing to the infringer by reason of infringement and (iii) the completeness, accuracy and reliability of the infringer's business accounts and records, the Bill proposes that the court may also take into account (iv) the conduct of the infringer after the infringement occurred (including after having been informed of the infringement) and (v) the likelihood of widespread circulation of infringing copies (See the proposed new Sections 108(2)(d) & (e) and 221(2) (d) & (e)). The likelihood of widespread circulation will be a particularly important factor for online infringement cases as it is the fundamental nature of the Internet that copies can be quickly and widely distributed or circulated by the click of a mouse.

6. Introducing a media shifting exception for sound recordings

This will legalise the conversion of songs from one format to another for the user's own convenient use or private enjoyment. Media shifting in a commercial context remains prohibited.

7. Expanding fair dealing exemptions

To promote e-learning and dissemination of information for the purposes of education and cultural, historic and heritage preservation, certain fair dealing exceptions that are applicable to schools, specified libraries and archives are proposed to be extended to cover museums under the Bill.

Corresponding copyright exceptions will also be added in respect of the new right of communication. For example, schools will be allowed to send or share among their teachers and students copies of artistic works, passages from a published literary, dramatic or musical works or extracts from a published sound recording or film for educational purposes via computer networks. Librarians, curators and archivists will be allowed to make copyright materials available for public access via computer terminals within their premises and to play or show sound recordings or films to members of the public within their premises.

Mayer Brown is a global legal services organization comprising legal practices that are separate entities (the Mayer Brown Practices). The Mayer Brown Practices are: Mayer Brown LLP, a limited liability partnership established in the United States; Mayer Brown International LLP, a limited liability partnership incorporated in England and Wales; Mayer Brown JSM, a Hong Kong partnership, and its associated entities in Asia; and Tauil & Chequer Advogados, a Brazilian law partnership with which Mayer Brown is associated. "Mayer Brown" and the Mayer Brown logo are the trademarks of the Mayer Brown Practices in their respective jurisdictions.

© Copyright 2011. The Mayer Brown Practices. All rights reserved.

This article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein. Please also read the JSM legal publications Disclaimer.