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What's new in Copyright Protection in HKSAR

Presentation by Kestutis Stasys KRIPAS
Assistant Director of Intellectual Property , Hong Kong SAR Government

If one traces the evolution of copyright law over the past century, one can see reflected therein, a history of the major technological innovations that have shaped how we, as a society, inform and entertain ourselves. How the law evolved to protect works created by authors utilizing such innovations differed however with the nature of the innovation.

In some cases a new category of protected work was necessary. Examples of this approach are the extension of the protected categories of works to include films, sound recordings, broadcasts, and more recently, the fixation of performances.

In other cases, protection was extended by the re-definition of an existing category, as happened in the case of computer software being regarded as a literary work.

In still other cases, it was not the legal protection that was lacking, but an effective means of enforcement of the protection of the rights of the authors from unauthorised reproduction. It is to this category of evolution that I shall direct my comments and specifically to the protection of works reproduced by means of optical discs.

Optical discs are highly efficient data carriers. They are small, practicably indestructible, versatile, as they can carry any digital information, and importantly, they are extremely cheap to produce. These very qualities make them the dream medium of a copyright pirate.

By the beginning of 1998, a combination of factors led to an explosion of optical disc production. The driving forces behind this explosion were:

The result was that the optical disc manufacturers were tempted to meet this demand and solve their under-utilized capacity by the production of pirated optical discs. This they did either knowingly, or carelessly by paying scant attention to licensing authorizations.

From a criminal enforcement point of view, this forced a change of emphasis from combating piracy in infringing copies of works on optical disc at a retail level, to one of trying to restrain the manufacture and export of infringing optical discs. This change in focus highlighted the need for enforcement tools specifically aimed at the mischief of manufacture of infringing copies. The special problems were identified as the need for a means:

The first two problems were tackled with the enactment of the Prevention of Copyright Piracy Ordinance in May 1998. In brief, it required optical disc manufacturers to obtain, from the Commissioner of Customs & Excise, a license for each of the premise from which they produced discs. Each manufacturer, in addition, upon being found to be a fit and proper person to hold a license, was assigned a unique manufacturer's code which, as a condition of the license, had to be marked on each disc produced. Licenses could be revoked for any breach of the Ordinance or the Copyright Ordinance. Customs Officers were given wide powers of entry to inspect licenses and manufacturer's codes. The powers of entry and inspection were backed by extensive powers of seizure of manufacturing plant and discs. In addition, criminal offences were created for:

The maximum penalty for operating without a license for a first offence is a fine of HK$500,000 and imprisonment for 2 years, and for a second or subsequent offence, a fine of HK$1,000,000 and imprisonment for 4 years. For operating from unlicensed premises, or applying a false manufacturer's code, the maximum penalty is a fine of HK$100,000 and imprisonment for 2 years for a first offence, and a fine of HK$200,000 and imprisonment for 4 years for a second or subsequent offence.

Customs & Excise report that after the first 18 months of operation of the new Ordinance, the incidents of pirated optical disc production (and, as an inevitable consequence, the exportation thereof) has dramatically decreased. They now know the location of all but the most underground production plants. Infringing discs seized in transit can also now be traced, through the manufacturer's codes impress upon them, to the factory that made them, thus enhancing investigation.

The operator significantly increases his risk of apprehension for infringement under the Copyright Ordinance by reason of unannounced inspections, under this Ordinance, by Customs Officers. Courts are also more likely to order final confiscation of the plant used in the production of infringing copies if the plant has also been used without a license. The reason is that plant is often owned, deliberately, by an entity other than the operator. Courts have been reluctant to forfeit plant owned by a third party leased to the operator on the grounds that the owner would find it difficult to guard against the production of infringing copies. However, it would be a simple task for an owner to ask to see a license before leasing plant to an operator, thus failure to take such a simple step will not engender much sympathy from the court.

These addition tools compliment therefore the traditional methods of enforcement pursuant to the Copyright Ordinance. The new tools have been well received both by copyright owners and those responsible operators who otherwise risked being tarred with the same brush as the pirates.

The third problem identified above was effective punishment of those behind organised production and distribution of infringing optical discs. The Police had always suspected that organized crime groups were behind the supply of, and ran, often through the exploitation of minors, the retailing of pirated optical discs at street level. As a result of one operation in 1998, which yielded 43 production lines for producing optical discs and some 22 million infringing copies, it became apparent that the people behind such operations had invested heavily in the operation and were highly organized. The largest difficulty however with syndicate operations is identifying and obtaining evidence against the masterminds behind the scheme. Shop employees and even warehouse managers were often genuinely unaware of the true owners of the goods. A means had to be found of compelling suspects close to the top to disclose information and produce documents to the investigating authorities under the treat of prosecution for failure to comply.

The solution adopted by the HKSAR was to extend the provisions of the Organized and Serious Crimes Ordinance (OSCO) to the major copyright offences. OSCO had been enacted in October 1994 to tackle organized crime. Its unique provisions are available only when certain criteria are met. Essentially the criteria are that a specified crime was connected, either with a particular triad society, or with two or more persons associating for the purpose of committing two or more of the specified offences and where each involves substantial planning and organization. If those criteria are met, the Ordinance provides for:

The removal of the right of silence works in this way. The Secretary for Justice may make an application to the Court of First Instance for an order against a particular person or persons of a particular description. The Court has to be satisfied that, not only does the person against whom the order is sought have information that is relevant, but also that the investigation could not effectively proceed without the information and that it is in the public interest that the investigation proceed in this manner. If the Court is satisfied that all the criteria are met, it may make an order requiring the person against whom the order is made to:

A person is not excused from answering question under an order made against him on the grounds that the answers may incriminate him. The answers given may not be used against him in any prosecution save a prosecution for giving a false statement or to rebut an inconsistent statement given by him in evidence. Failure to comply with the order without reasonable excuse is an offence attracting a fine of $100,000 and 1 years imprisonment. Knowingly providing false or misleading information is an offence attracting a maximum fine of $500,000 and 3 years imprisonment.

I will not develop the enhanced sentencing provisions as they are self evident.

For the confiscation of assets provision, the defendant must have benefited from the offences to the extent of at least $100,000. The court is permitted to make certain assumptions including, that money or property held by the defendant in the 6 years preceding his indictment or since his conviction, was a payment or reward in connection with the commission of an organized crime, and that any payments made by the defendant have been paid from such reward. If the court is satisfied that an order should be made, it may make an order over all of the benefit the court is satisfied the defendant has received from organized crime.

It is envisaged that by treating copyright offences as seriously as murder, theft and corruption, that this will operate as a severe deterrent to those tempted to engage in such activities under the illusion that the courts will not treat them harshly.

The fourth problem identified above was to deprive the optical disc manufacturer of source material for use as a "master" for the production of infringing copies. It had become quite evident, from the examination of seized pirated optical discs, that the source for the "masters" of most new films, were camcorder versions shot right in the theatre. The quality of these was not good, but that did not seem to deter the purchasers of the pirated discs made from this version. The sole object of the purchaser seemed to be to see the movie within days of its cinema release.

There were obvious difficulties in preventing such filming. The cinema owners had no powers of confiscation; they were reluctant to confront persons seen in the act of filming, and wished to avoid a disturbance to the enjoyment of other patrons. It was difficult for the Customs & Excise Officers to respond in time to a complaint and to apprehend a bootlegger before he left the cinema. The solution adopted was the introduction, before the Legislative Council, of an amendment to the Prevention of Copyright Piracy Ordinance which created a new offence of unauthorized possession of video recording equipment in a place of public entertainment.

Authorization could be obtained beforehand from the manager of the establishment so that news reporting or official recordings of an outdoor concert, for example, could be made. The Ordinance would make it lawful for the manager to refuse admission to, or require a person to leave that place, if he is in possession of video recording equipment. The manager is permitted to use reasonable force if necessary to evict. Enforcement officers, with the consent of the manager, will be permitted, without a warrant and without payment of an admission fee, to enter a place of public entertainment for the purposes of search. Anyone convicted of an offence against the Ordinance will be liable for a fine of $5000 on a first conviction; and a fine of $50,000 and to imprisonment for 3 months for a second or subsequent conviction.

To round off my review of what's new in copyright law, I will briefly mention an amendment that has been proposed to the Legislative Council which is intended to close a possible loophole in the offence of possession, in the course of trade or business, of an infringing copy of a copyright work. The philosophy in the HKSAR has been that only those involved in the commercialized use of infringing works should face criminal charges. A purchaser for his own use would not be prosecuted, mainly due to the difficulties many purchasers would experience in knowing whether the work they are buying is genuine or infringing. However, it was not certain that with the Ordinance, as it was worded, use, in business, of infringing works would necessarily fall within the definition. A business, for example, that used infringing accounting software but sold clothing might have escaped conviction as its possession of the infringing software was not for the purpose of trade in the infringing work.

A new definition has been proposed to close this loophole. Wherever the old phrase appeared in the Copyright Ordinance, it has now been replaced with the expression "for the purpose of, in the course of, or in connection with, any trade or business".

These examples demonstrate how the law of copyright must keep evolving to keep pace with new infringement methods. They also demonstrate the commitment of the Administration of the HKSAR in combating copyright piracy.