Provisional Legislative Council
Panel on Trade and Industry

Enforcement against copyright piracy activities

INTRODUCTION

This paper outlines the Government ' s strategy in the fight against copyright piracy and reports on the latest enforcement efforts and initiatives in hand.

STRATEGY FOR COMBATING COPYRIGHT PIRACY

2. The Government is committed to putting in place and enforcing a robust regime for the protection of intellectual property rights (IPR), including copyright. This is necessary to encourage creativity and enhance Hong Kong ' s long-term competitiveness.

3. To protect the legitimate rights of copyright owners and to help fight piracy, we need a well co-ordinated and comprehensive strategy covering the following elements -

1. a modern, sound and transparent legal basis;

2. a robust enforcement regime;

3. a far-sighted anti-piracy publicity and IP education programme; and

4. a strong alliance between the rights owners, the Government and other relevant authorities.

Copyright Ordinance

4. The Copyright Ordinance that came into force on 27 June 1997 contains new provisions that tighten controls over copyright infringements. For instance, the law has -

1. empowered the Commissioner of Customs and Excise (CCE) to seize and forfeit suspected pirated copyright products; and to release seized samples and disclose information to copyright owners to help them establish infringement and pursue civil remedies;

2. introduced an additional presumption based on affidavit to facilitate proof of copyright subsistence and ownership;

3. doubled the maximum penalty on first conviction for possession of pirated copyright products for trade and business purpose (to $50,000 per infringing copy and four years ' imprisonment) and plates for making pirated copyright products (to a fine of $500,000 and eight years ' imprisonment);

4. introduced an export offence to penalise those who export pirated copyright products or articles used to make infringing copies of copyright works from Hong Kong to other places; and

5. maintained the Court ' s power to award ' additional damages ' in an action for infringement of copyright having regard to all the circumstances as the justice of the case may require.

Enforcement efforts

5. The Government enforces criminal sanctions against the manufacture, import, export and distribution of pirated works on a commercial scale. Right owners may take civil actions against claimed infringements of their rights.

6. Over the past few years, CCE has stepped up enforcement actions against copyright piracy activities at all levels, including the importation, distribution and retailing of infringing goods. We recognise the importance of surveillance and intelligence gathering in combating piracy; CCE has therefore been liaising closely with the Commissioner of Police in sharing information, particularly on organised syndicates and prime suspects.

7. We have also been forging closer liaison with IPR enforcement agencies in other territories to stop the smuggling of and international trade in pirated goods. For instance, CCE has organised a number of visits, meetings and seminars with counterparts in the Mainland and has established mutual contact points to facilitate exchange of information and intelligence. We have also strengthened co-operation with the US, Japan and Korea Customs attaches in Hong Kong to keep in view the piracy trends between Hong Kong and these countries.

8. Adequate staffing is the key to maintaining a robust enforcement regime. The Intellectual Property Investigation Bureau (IPIB) in the Customs and Excise Department currently has a strength of 164 officers; reflecting a 40% increase over the past three years. By October this year, IPIB will have a further increase of 24 officers to help tackle the IPR problem more effectively.

9. With the additional powers conferred upon IPIB, the unit launched operations "Thunderbolt" and "Terminator" against the notorious piracy retail black spots around mid-July. The key results, juxtaposed against those of previous years, are summarised as follows -

10. Since last year, we have seen a notable increase in penalties imposed by courts. In 1996, 144 persons received immediate custodial sentences for offences relating to copyright, compared with 18 in 1995. In the first seven months of 1997, 148 persons have already been jailed for convicted copyright offences. Besides, we are endeavouring to see that significant cases are tried at appropriate level of Courts such as District Courts instead of Magistracies to ensure deterrent penalties are imposed.

Publicity and education

11. The Intellectual Property Department (IPD) plans to increase public awareness of intellectual property rights among the people of Hong Kong through a progressive and comprehensive public education programme starting in 1997-98, with an initial emphasis on secondary students. The department also conducts visits to educational institutes and organises seminars, workshops and exhibitions to promote intellectual property.

12. A Hong Kong Intellectual Property Society was established in December 1996. This is a private society with membership drawn from a wide range of rights owners; the objective is to promote a better understanding of the significance of protecting intellectual property rights. IPD provides venue and secretarial services to the Society.

Co-ordination and alliance with rights owners

13. The Trade and Industry Bureau has been co-ordinating an inter-departmental working group, comprising representatives from the Intellectual Property Department, Customs, Police, Department of Justice, and Information Services Department, to review government actions in the protection and enforcement of copyright in Hong Kong. The group meets and corresponds regularly.

14. The pooling of industry and government resources helps to make our separate efforts in the fight against copyright piracy more effective. Accordingly, we have initiated more regular dialogues with the copyright industries in Hong Kong. An informal advisory group now exists, with representation drawn from the following companies -

1. Business Software Alliance (BSA);

2. Hong Kong Kowloon and New Territories Motion Picture Industry Association Limited (MPIA);

3. International Federation of Phonographic Industry (IFPI);

4. Motion Pictures Association;

5. Nintendo; and

6. Software Publishers ' Association (SPA).

15. The advisory group has met three times since April and has discussed, inter alia, the overall strategy for combating copyright piracy; the feasibility of imposing some form of liability on landlords who knowingly allow their premises to be used for dealing in piracy; and the feasibility of a reward scheme to facilitate intelligence-gathering. The advisory group has also formed two working groups to explore -

1. the extent to which civil proceedings could be streamlined or simplified; and

2. the extent to which the import and export of CD manufacturing equipment and factories, and the use of identification coding on CD products, should be controlled.

Both groups have met and will continue to explore initiatives in the fight against piracy. They will consult the CD manufacturing industry on ideas to reduce the risk of piracy.

FURTHER ENFORCEMENT INITIATIVES

16. Operations ' Thunderbolt ' and ' Terminator ' already had an impact on many operators in the more notorious black spots. However, the fight against copyright piracy is a long-term battle. We must keep reviewing our strategy and sharpening our tools to make sure that we get on top of the problem. Other than on-going efforts in stepping up co-ordination with Mainland and other authorities, seeking additional staff support, monitoring and reacting to new piracy trends, etc., we are positively considering additional actions described below.

Closure orders

17.When the Bills Committee of the Legislative Council considered the Copyright Bill in June this year, we floated the idea of introducing some form of liability (civil and/or criminal) against landlords who knowingly allow their premises to be used in the trading of copyright infringing articles. Whilst agreeing that the proposal would strengthen enforcement at the retail level and help target actions against infamous shops, the Bills Committee was concerned that innocent traders or landlords might be victimized.

18.The Bills Committee considered that copyright infringements would be difficult to detect and landlords might have difficulty knowing what exactly was going on in their premises. Hence, it would be unfair to hold them liable for infringing activities committed by their tenants. Besides, the proposal could unfairly prejudice the landlord ' s interests if, for instance, he had to take legal action or compensate the tenant for terminating a tenancy agreement upon suspecting that the tenant was engaged in copyright infringing activities. The value of premises known to have been used for such activities would also go down. To avoid trouble, some landlords might simply refuse to let their premises to retailers of copyright goods; this would in turn be unfair on the legitimate dealers.

19.We appreciate the foregoing concerns. As our ultimate objective is to debar illicit operators from having a place to continue carrying on their illicit businesses, we are now inclined to repackage our proposal in the form of quick but short-term closure orders directed against any shop which is the location of a convicted copyright piracy case. There are similar provisions for closure orders to be imposed against vice establishments or restaurants operating without licences. To be effective, however, such closure orders must be granted within a very short time frame; preferably courts should be able to impose them ' automatically ' once a conviction is established. Speed is of the essence because pirates are highly mobile and it is extremely difficult to establish repeated convictions. If the application procedures for closure orders are lengthy and cumbersome, they will not be effective either.

20.We believe the closure orders should be maintained for a sufficiently long period so that pirates could feel the pinch of economic loss whereas landlords could still rely on the normal tenants ' deposits as buffer against unnecessary third party loss. A two-week sanction seems to be a reasonable balance.

21.We will formally consult the relevant parties and revert to this panel in due course.

Reward scheme

22.Representatives from various copyright industries have agreed to contribute funding for, and CCE has also agreed to administer, a reward scheme targeted at copyright-infringing activities. We have developed the framework for the reward scheme and plan to launch it as soon as possible.

Regulation of CD manufacturing equipment

23.The majority of pirated CDs seized in recent years had been sourced outside Hong Kong. We have recently received allegations about the increasing presence of CD factories in Hong Kong and have been warned of the need to ensure that they do not engage in illicit productions. To help monitor the movements of CD manufacturing equipment, we intend to introduce some licensing requirements through subsidiary legislation under the Import and Export Ordinance. We will consult this panel in due course.

Regulation of CD factories

24.There is no evidence showing that CD factories in Hong Kong are engaged in the production of infringing copies. However, we are considering the need to institute a simple system that would allow CCE the power if necessary to perform checks on such factories. This may require new legislative provisions. Again, we will consult the trade and this panel in due course.

Identification coding

25.We understand that some 70% of the sound recording, film and computer software companies in Hong Kong have already imposed a requirement for all their CD products to be manufactured with a form of source identification coding. The industry has requested the Government to consider making the use of such a coding system mandatory. We are exploring the implications. Apparently, the Mainland is the only place in the world where such use is mandatory.

Organised and Serious Crimes

26.We are discussing with the Security Bureau the feasibility of treating copyright infringements as a kind of organised and serious crime under the Organised and Serious Crimes Ordinance. This proposal, if adopted, would confer greater powers upon the enforcement authorities to check the accounts of suspected pirates and to confiscate their proceeds in dealing in piracy. Amendments to the Ordinance will be required.

Training

27.We envisage an increase in piracy through the INTERNET environment. We have therefore requested our counterparts in the United States to assist in offering training opportunities in the fight against piracy in this format. We have also invited representatives from the copyright industry to brief us on developments.

CONCLUSION

28.The fight against copyright piracy is a difficult one. But we already have a number of additional measures in mind to step up our enforcement efforts. With the concerted efforts of the Government, rights owners, enforcement authorities across the boundary, etc., we are confident that piracy will be controlled and contained.

29.We welcome any suggestions from Members on the strategy and initiatives set out in the foregoing sections. Since some of the initiatives require legislative amendments, we also look forward to the support of Members in seeing them through expeditiously.

Trade and Industry Bureau
29 August 1997