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Following is the full text of a speech by the acting Secretary for Commerce and Industry, Miss Yvonne Choi, in moving the second reading of the Copyright (Suspension of Amendments) Bill 2001 in the Legislative Council today (May 2):

Madam President,

I move that the Copyright (Suspension of Amendments) Bill 2001 be read the second time.

The Bill seeks to suspend the implementation of the Intellectual Property (Miscellaneous Amendments) Ordinance 2000 insofar as it applies to certain criminal provisions in the Copyright Ordinance. But the new provisions will continue to apply to copyright works involving computer software, movies, television dramas and music.

Madam President, as the new Ordinance that came into effect on April 1, 2001 has aroused much concern and heated discussions, I would first of all like to brief this Council on the background of that Ordinance.

The use of copyright infringing products in business, such as pirated computer software, music and film compact discs, is a serious problem in Hong Kong. According to an unofficial estimate, about 50 per cent of all computer software used in business is pirated.

The rationale underlying the legislative amendments last year is to enhance the protection of intellectual property rights. Hong Kong is undergoing a rapid transformation into a knowledge-based economy. Our local enterprises increasingly rely on knowledge, technology and innovative ideas to enhance their competitiveness. To cope with this development, it is very important that we adopt a proactive attitude in protecting intellectual property rights and cultivating public awareness of the issue.

The implementation of the Ordinance will foster the development of local knowledge-based enterprises, particularly the growth of the computer software industry, thereby providing more choices of software for our industries. It will also contribute to the development of Hong Kong as a leading information technology city in Asia. In addition, enhancing the protection of intellectual property rights would help attract foreign investments to Hong Kong, which will in turn contribute to our long-term economic development and create more job opportunities.

Madam President, intellectual property right is a complex subject. Different media have different regimes for copyright protection and for the licensing of copyright works. In principle, copyright works in all media, such as the electronic media and the printed media, should enjoy the same level of protection without differentiation.

Successful experience of other countries and regions reveals that adequate copyright protection requires the determination of the government, up-to-date legislation and effective enforcement machinery. Furthermore, it will require a mature and well established licensing mechanism and the cultivation of public respect for intellectual property rights.

In Hong Kong, different media are at different stages of developing their regimes for copyright protection and licensing of copyright works. As regards computer software and works of films and music, the licensing mechanism is relatively simple and clear. The Government's determination and measures taken to combat pirated software and compact discs over the past few years have enhanced the public's awareness of copyright protection for these types of work. With the co-operation of the industries concerned, we have been very successful in curbing the piracy of these works at the production and retail levels. Our efforts are internationally recognised.

In comparison, the licensing and exemption regimes in respect of copyright works of other media such as books, newspapers and magazines, television and radio broadcasting and the Internet, have yet to be established or are being refined. In the absence of a convenient mechanism for obtaining the required authorization and faced with the threat of criminal proceedings, the new Ordinance has hampered the dissemination of information in enterprises as well as teaching activities in schools. In this connection, at the meeting of the Legislative Council Panel on Commerce and Industry on April 12, 2001, the Secretary for Commerce and Industry, Mr CHAU Tak-hay, expressed regrets to the public on behalf of the Government and pledged to explore ways to solve the problem. He himself made an apology to the public as well.

To address the immediate concerns of the public, the Government has drafted the Bill so that the criminal provisions in the recently amended Copyright Ordinance will revert to the position before the amendments took effect. But the new provisions will continue to apply to copyright works involving computer software, movies, television dramas and music.

Some Members suggest that the Bill should adopt an all-embracing suspension approach to cover all copyright works including computer software and so on. I wish to make it clear that the Government cannot agree to this.

The suspension should not apply to such copyright works because they are not normally "information" disseminated in enterprises or schools. Where these copyright products are involved, the general public has not encountered the difficulties just mentioned in complying with the new Ordinance.

Moreover, these products generally have substantial commercial value and the piracy of them, in particular computer software, in Hong Kong and elsewhere is rampant. In the past, the widespread piracy problem has deterred companies from investing in the development of new software to compete with mainstream products in the market. The new Ordinance has the effect of encouraging enterprises to use legitimate software. In the long term, this will attract more investment in the development of new software, promote market competition and offer consumers with better choices at lower prices.

It is therefore necessary to continue with the implementation of the new Ordinance in respect of the above products; otherwise, all our previous efforts will count for nothing.

I must emphasize that the legislative intent of the Government in making the possession of pirated computer software in the course of business a criminal offence has been clear and unambiguous. Both the Legislative Council and the public have understood and agreed with this. In fact, in the consultation document published in early 1999, the Government stated clearly its proposal to make it an offence for the possession of pirated goods such as computer software in the course of business. This proposal gained wide public support. When the results of the public consultation exercise were discussed in June 1999, the Legislative Council Panel on Trade and Industry also explicitly support the proposal. When introducing the Bill into the Legislative Council for the First and Second Readings in January 2000, the Government clearly explained the legislative intent. This was later reiterated at the Bills Committee meeting and the Third Reading of the Bill at the Legislative Council in June. It is evident from the above that during the processes of consultation and scrutiny of the Bill, the Legislative Council did not object to the legislative intent and the public supported the proposal. After we launched the massive publicity programme for the new Ordinance last November, we have not received any objection from the public to the principle of imposing criminal sanction against the possession of pirated computer software in the course of business.

Thus if an all-embracing suspension approach were adopted hastily without rhyme or reason, it would send a wrong message that Hong Kong takes a retrograde step in the protection of intellectual property. The public and enterprises would be confused. Hong Kong's international image would be seriously damaged, and foreign investors' confidence in Hong Kong would be affected.

I wish to urge Members not to adopt the all-embracing suspension approach - it is just like give up eating for fear of choking. This will only hinder our efforts in combating piracy activities.

The suspension is only a short-term measure which will end on July 31, 2002. After the enactment of the Bill, we shall consult non-government organizations, the copyright owners' industries and various sectors of the community and the Legislative Council, with a view to formulating a long-term solution to the problem. Where necessary, we will introduce another Bill to make further amendments to the law.

Madam President, the early enactment of this Bill will help address the concerns of the public. With these remarks, I commend this Bill for Members' support.

End/Wednesday, May 2, 2001

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