Information Paper for
LegCo Panel on Trade and Industry
INTELLECTUAL PROPERTY PROTECTION IN HONG KONG

Introduction

This paper briefs Members on the various additional measures undertaken by the Government in the past few months on the protection of intellectual property rights (IPR) in Hong Kong, with particular regard to copyright piracy.

Hong Kong Government Policy

2. The Hong Kong Government is firmly and totally committed to combating copyright piracy, trade mark counterfeiting and related IPR infringements. We also seek the full cooperation from IP right owners, which is essential for successful criminal prosecutions.

3. We act decisively against IPR infringers. In recent months, we have taken additional pro-active measures to combat copyright piracy on the following fronts :

  1. closer liaison with IPR enforcement authorities in China;

  2. vigorous enforcement action at the retail, distribution and importation levels;

  3. legislative measures to strengthen enforcement capabilities;

  4. introduction of deterrent penalties; and

  5. closer liaison and cooperation with copyright owners in taking enforcement and prosecution actions.

Closer Liaison with IPR Enforcement Authorities in China

4. We recognise the importance of forging closer liaison and cooperation with IPR enforcement authorities in China to stop pirated copyright products from entering Hong Kong. We have made considerable progress on this front.

5. We have established specific contact points with the IPR enforcement authorities in the Guangdong Province and the Shenzhen Special Economic Zone. Agreement was also reached on the exchange of information and intelligence, the organisation of seminars and visits and, where appropriate, the mounting of parallel operations by the Hong Kong and relevant Chinese authorities at the Hong Kong-China border. So far, four such operations have been held, one of which led to the seizure of 15,000 music CDs, CD-ROMs and VCDs at a total value of HK$620,000 at one of the Hong Kong-China land border control points.

6. In addition, a number of high-level visits and seminars were and will be organised to enhance greater cooperation with the IPR authorities in China. These include :

  1. a delegation comprising representatives from IPR-related agencies in Shenzhen visited the Hong Kong Intellectual Property Department and the Hong Kong Customs in April 1996, at which it was agreed that regular meetings on a half-yearly basis should be held between the two sides;

  2. the Intellectual Property Department co-organised an IPR enforcement seminar with the China Council for the Promotion of International Trade and the Hong Kong Trade Development Council in June 1996;

  3. the Commissioner of Customs and Excise led a delegation to visit the Chinese Customs, Ministry of Public Security, Ministry of Foreign Trade and Economic Cooperation (MOFTEC) and IP Co-ordinating Office in Beijing and Shanghai in September 1996 to discuss greater cooperation in IPR enforcement;

  4. the Director-General of Trade led a delegation to visit MOFTEC in September 1996 to discuss specific arrangements for cooperation on IPR protection and a number of other trade issues; and

  5. the Director of Intellectual Property will lead a delegation to Shenzhen to have further exchanges with the local IPR authorities in November 1996.

Vigorous Enforcement Actions

7. The Hong Kong Customs have continued to take vigorous enforcement actions at the retail, distribution and importation levels.

8. At the retail level, a series of territory-wide mega-raids was mounted. In each territory-wide mega-raid, the Customs mobilised some 200 officers and raided shopping arcades throughout Hong Kong including the infamous Golden Shopping Arcade and the Wanchai 298. In the first nine months of 1996, Customs have raided some 237 shops, arrested 291 persons and seized 188,910 CDs, CD-ROMs and VCDs at a total estimated value of HK$11.6 million. Where appropriate, the Customs join hands with the Police and the Fire Services Department in their enforcement actions. In infamous blackspots such as the Golden Shopping Arcade, Customs officers raided the shops almost on a daily basis as a result of which many have closed down.

9. At the distribution level, Customs have conducted many successful raids on storage premises. Customs have stepped up intelligence gathering, set up a copyright piracy hotline (tel. no. : 2545 4546) to receive information and coordinated closely with the Police on surveillance and intelligence gathering. In the first nine months of 1996, Customs have successfully conducted enforcement actions in respect of 12 major storage premises, resulting in the seizure of some 170,000 CDs, CD-ROMs and VCDs at a value of HK$8.1 million.

10. The closer cooperation between the Hong Kong Customs and the Police has led to successful crackdown on syndicates. With the wider intelligence gathering network, the Police have been able to supply useful information to the Customs, based on targets identified by the latter. Two syndicates have been smashed resulting in the seizure of 11,246 CDs, CD-ROMs and VCDs at a total value of HK$1.2 million. Such intensified Customs-Police co-operation will continue.

11. At the importation level, Customs have stepped up enforcement actions at the various border control points. In the first nine months of 1996, Hong Kong Customs seized 31,620 VCDs, 15,121 CD-ROMs and 2,199 music CDs.

12. To further enhance Customs enforcement based on intelligence, the Hong Kong Customs have been registered in the contact point list under Article 69 of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement). This will enable Customs to communicate more effectively and efficiently with the IPR enforcement agencies of other World Trade Organisation (WTO) members.

13. Enforcement against copyright piracy activities is very manpower-intensive. For the three-year period from 1994 to 1996, manpower in the Intellectual Property Investigation Bureau (IPIB) of the Hong Kong Customs is being increased by 40%. We propose to increase the manpower of the IPIB by a further 15% to enhance its capabilities in intelligence gathering, surveillance, border interceptions and prosecution in 1997. This will make the IPIB one of the most powerful IP enforcement agencies in the region.

Legislative Measures

14. With the enactment of the Intellectual Property (World Trade Organisation Amendments) Ordinance in May 1996 for implementing Hong Kong’s obligations under the TRIPS Agreement of the WTO, the Hong Kong Customs are armed with additional legal power to tackle organised syndicates masterminding cross-border copyright piracy activities. The new provision makes it an offence for any person to procure, aid or abet any other person, in Hong Kong or elsewhere, to manufacture pirated copyright works outside Hong Kong for export to Hong Kong.

15. The Intellectual Property (World Trade Organisation Amendments) Ordinance further enables the Hong Kong Customs to seize suspected imports of pirated copyright products at the border on the basis of court orders applied by copyright owners in advance. This provision, when brought into force by the end of 1996, will facilitate copyright owners in initiating civil court actions against persons bringing in infringing imports.

Deterrent Penalties

16. We increased the penalties against copyright piracy activities substantially in May 1995. Details of the enhanced penalty provisions are set forth at Annex A. The Hong Kong courts have taken note of the seriousness of copyright piracy as evidenced by the heavier penalties handed down. In the first nine months of 1996, a total of 87 persons received immediate custodial sentences for offences relating to copyright piracy compared to 18 for the whole of 1995.

17. The first case tried under the enhanced penalty provisions by the District Court, which involved 3,300 pirated CDs, CD-ROMs and VCDs, was concluded in July 1996. The two defendants were respectively convicted and sentenced to imprisonment for four months with a fine of HK$308,000 and to imprisonment for two months with a fine of HK$51,000. At the invitation of the court, the Director of Public Prosecutions (DPP) highlighted the adverse effects of copyright piracy activities on Hong Kong’s economic interests and international reputation. In delivering the judgement, the presiding Judge took note of the adverse effects and criticised the criminal behaviour of copyright pirates. The court’s readiness to impose deterrent penalties against IPR offenders can be seen from the following extract from the judgement :

"The intention of the legislation in increasing the penalty indicates a determined effort by the government to stop copyright piracy. I think the time has come that the courts of Hong Kong must give a clear message to the effect that Hong Kong has no intention whatsoever of becoming a safe haven for people who engage in the manufacturing and selling of pirated material. The legitimate business interest of the registered owners of trade marks and those who had spent time and money on research and development must be protected. He who flouts the law should expect to receive heavy penalties."

Another five District Court cases have been scheduled for hearings in the coming few months.

18. In appropriate cases, the DPP will continue to draw to the court’s attention the adverse effects of copyright piracy on Hong Kong’s economic interests and international reputation. Where the sentences passed by the court are manifestly low in particular cases, the Attorney General will seek reviews of the sentences or appeal to the higher court.

Liaison and Cooperation with Copyright Owners

19. The Customs maintain close working contacts with IP owners and their representatives. Successful enforcement and prosecution require the full co-operation of copyright owners. The Customs have been explaining to copyright interests such as the Software Publishers Association (SPA), Business Software Alliance (BSA), Nintendo, International Federation of the Phonographic Industry (IFPI) and other IPR groups the requirements for initiating criminal investigations into copyright piracy activities. A summary of the requirements is attached at Annex B.

20. The Director of Intellectual Property visited a number of major copyright interests in the United States in late September 1996 to brief them on efforts made by the Hong Kong Government in the fight against IPR infringement and to appeal for their support and cooperation in Customs’ enforcement and prosecution actions. In addition, the Intellectual Property Department has set up a homepage on the INTERNET [ http://www.houston.com.hk/hkgipd/ ] to provide information to the public in Hong Kong and overseas about our protection of intellectual property rights.

21. We have also been distributing fact sheets on IP protection in Hong Kong to interested parties. We organised two briefings in September in Hong Kong to update local representatives of copyright interests, including Motion Picture Association, Alliance Against CD-ROM Theft, Nintendo, IFPI, BSA and SPA, on the various anti-piracy measures undertaken by the Hong Kong Government.

Trade and Industry Branch
Ref : TIB CR 81/46/2
[panel-p]
October 1996

Annex A

Copyright (Amendment) Ordinance 1995 Comparison of Copyright Piracy Penalties in Hong Kong

Offence/Penalties

Before enactment

After enactment

Possession of infringing copies


First conviction

Second conviction

(Repeat Offenders)

(a) fine

$1,000 per copy

$25,000 per copy

$50,000 per copy

(b) imprisonment

12 months

2 year

4 years

Possession of any plate for making infringing copies


First conviction

Second conviction

(Repeat Offenders)

(a) fine

$50,000

$250,000

$500,000

(b) imprisonment

2 years

4 year

8 years

Note

:

The Copyright (Amendment) Ordinance 1995 also provides that the management of a partnership or corporation involved in copyright piracy activities will be liable to the same new penalties.

Annex B

COMPLAINANTS (COPYRIGHT OWNERS/AGENTS) ARE REQUIRED TO COMPLETE THE FOLLOWING FORMALITIES WHEN LODGING A COMPLAINT :-

1. provide name and address of alleged shop/firm/person, etc.;

2. provide genuine and faked products on alleged subject matter and certify the falsity of the faked product;

3. provide a competent person who will be required to examine seizures and to testify in future court proceedings;

4. provide proof of copyright subsistence and ownership by means of swearing an affidavit or undertake to provide such document for use in subsequent court proceedings.

Last Updated on 21 August 1998