Originally published August 23, 2011

Keywords: online service providers, OSPs, copyright infringement, Copyright (Amendment) Bill 2011


Last month, we published a legal update on the Copyright (Amendment) Bill 2011 (the "Bill"). One of the major issues is about the potential liability of online service providers ("OSPs") for copyright infringement occurring on their service platforms.

In this regard, the Bill seeks to introduce a set of "safe harbour" provisions which will shield OSPs from liability in damages or other pecuniary remedy for copyright infringement which occurred on their service platforms so long as certain conditions are met.

The conditions

The conditions which OSPs must comply with in order to be protected under the Bill's safe harbour provisions are set out in the proposed section 88(b) (2):

  1. the OSP has taken reasonable steps to limit or stop the infringement as soon as practicable after it received a notice of alleged infringement, became aware that the infringement has occurred or became aware of the facts and circumstances that would lead inevitably to the conclusion that the infringement has occurred;
  2. the OSP has not received and is not receiving any financial benefit directly attributable to the infringement;
  3. the OSP accommodates and does not interfere with the standard technical measures that are used by copyright owners to identify or protect their copyright works; and
  4. the OSP designates an agent to receive notice of alleged infringements by supplying, through its service, the name, address, telephone number and electronic mail address of the agent.

Code of Practice

The Bill only sets out the basic framework of a notification system for reporting infringement. The safe harbour provisions will be supported by a non-statutory Code of Practice to be published by the Secretary for Commerce and Economic Development (the "Code").

Compliance with the Code is voluntary. The Bill, however, expressly states that an OSP shall be treated as having satisfied the condition stipulated in the proposed section 88(b)(2) if it complies with all the provisions in the Code. The Code will therefore be of significant importance to all OSPs which wish to be protected under the safe harbour provisions.

A draft Code has been formulated and is currently open to the public for consultation, until l9 September 2011. It sets out practical guidelines and procedures for OSPs to follow when they are notified of infringing activities on their service platforms. The draft Code provides three systems for OSPs to implement depending on the type of copyright infringement activities found on their service platforms.

1. The Notice and Notice System

The "Notice and Notice System" applies to OSPs which offer transmission, routing and/or provide access to digital online communications of material of the user's choosing, for which the OSPs do not select or modify the material contained in the transmission.

Any person who believes that a subscriber to an OSP's online service has infringed the copyright of a copyright owner may send a "Notice of Alleged Infringement" to the OSP. The Notice of Alleged Infringement should set out the details of the complainant, the particulars of the alleged infringement and the particulars of the copyright work which is alleged to have been infringed. A template Notice of Alleged Infringement is attached to the draft Code. OSPs are not required to verify the authenticity and contents of a Notice of Alleged Infringement if it contains the full particulars as required by the Code and is duly signed and delivered.

If the Notice of Alleged Infringement cannot be processed for any reason, e.g. the notice refers to an account that is no longer active or the IP address of the subscriber cannot be identified, the OSP should reply to the complainant in writing as soon as practicable. If there is no problem with the Notice of Alleged Infringement, the OSP should send a written notice to the subscriber in question to inform such subscriber of the alleged infringement and the consequences of copyright infringement in Hong Kong.

2. The Notice and Takedown System (Storage)

A different set of guidelines apply to OSPs which store, at the direction of a subscriber, material on their service platforms. As with the Notice and Notice System summarised above, the procedure starts with a person sending the relevant OSP a Notice of Alleged Infringement.

Upon receiving the Notice of Alleged Infringement, the OSP should "takedown" the infringing material or activity (i.e. remove or disable access to such infringing material or activity) within a specific timeframe. The amount of time an OSP has for taking down the infringing material or activity depends on the status of the copyright work. For infringement relating to pre-release or newly released copyright work, the OSP should take action within 1/3 working days (to be decided) of receiving the Notice of Alleged Infringement. For copyright work which has already been released for some time, the OSP would have 7/10 working days (to be decided).

The OSP should, after removing or disabling access to the infringing material, send a written notice to the subscriber in question to inform such subscriber of the alleged infringement, the consequences of copyright infringement in Hong Kong and whether the subscriber wishes to dispute or deny the alleged infringement. If the subscriber wishes to dispute or deny the alleged infringement, the subscriber should send a "Counter Notice" to the OSP within 20 working days of receiving the OSP's notice.

The Counter Notice should, as indicated by the template Counter Notice attached to the draft Code, contain (i) the particulars of the subscriber; (ii) the particulars of the material that has been removed or to which access has been disabled; and (iii) a statement that the subscriber believes, in good faith, that the removal or disabling of access to the material was the result of a mistake or misidentification. The OSP has no obligation to verify the authenticity and contents of a Counter Notice, even though only the OSP would know whether the particulars of the subscriber contained in the Counter Notice are true.

If the form and delivery of the Counter Notice are proper and valid, the OSP should promptly send a written notice to the complainant enclosing a copy of the Counter Notice and a statement that if the complainant does not, within 10 working days of receiving the notice, inform the OSP that the copyright owner or its authorised representative has commenced proceedings in Hong Kong seeking a court order to restrain the subscriber from engaging in the alleged infringement on the OSP's service platform, the OSP will reinstate or cease disabling access to such material or activity.

If an OSP becomes aware of infringing material or activity residing on its service platform, it may commence the takedown procedure outlined above on its own initiative, rather than wait for a person to submit a Notice of Alleged Infringement.

3. The Notice and Takedown System (Information Location Tools )

This system applies to those OSPs which have linked or referred users via information location tools to an online location containing infringing material or activity. If a person sends a Notice of Alleged Infringement to an OSP, the OSP should disable access to the alleged infringing material within 1/3 working days if the copyright work involved is pre-release or newly released, and 7/10 working days in other cases.

False statements

To ensure that OSPs will not be overburdened with an overwhelming volume of infringement notices, the proposed section 88E imposes criminal liability for knowingly or recklessly making a false statement in a Notice of Alleged Infringement or Counter Notice. A person who commits an offence under the proposed section 88E will be liable on conviction to a fine of HK$5,000 and to imprisonment for two years.

Further, under the proposed section 88F, any person who knowingly makes a false statement or a statement which the person does not believe to be true in a material respect in a Notice of Alleged Infringement or Counter Notice will be liable in damages to any person who suffers loss or damage as a result of the statement.

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