'Letter from HK' by Secretary for Trade and Industry

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Following is the English translation of the "Letter from Hong Kong" by the Secretary for Trade and Industry, Mr Chau Tak Hay, broadcast on RTHK's Radio 1 this (Saturday) morning:

There has been a lot of discussion in the media and among the public about optical disc copyright piracy. Some people said the Government had made the problem worse with inadequate enforcement; some said that the copyright industry, in particular the audio visual sector, should review the quality and pricing of their products; some even said the considerable profits of the pirates would lure the unemployed into the illicit trade.

I was asked at a press conference on 1 May whether "the Government was trying to shift its responsibilities in fight copyright piracy onto ordinary citizens"; and that "cheaper, pirated goods were the natural choices for less well-paid people during a economic down-turn". I regret to see such dis-respect about intellectual property rights. There are people who buy and knowingly use pirated movies or computer software without feeling any sense of guilt, sometimes even bragging about the act. This is not how a responsible and righteous man will behave, nor an act we should see in a healthy society. Both the Government and the right owners have a role in combating copyright piracy, but it is also important that they have the support of the masses.

Intellectual property rights are intangible, private rights; they should be respected and protected by law like physical property rights before we could encourage new inventions, or cultivate creative work in the audio-visual fields. These private property rights are the foundations of Hong Kong's prosperity. Copyright pirates will jeopardize our business and creative environment, making it unsafe for new products and the life blood of inventors, and damage Hong Kong's hard-won reputation as a major business and financial centre. It is the public who suffers when our economy suffers.

Let me take the film industry as an example. While copyright piracy is not the sole reason behind the decline of our film industry, the pirates have nonetheless dealt it a severe blow. Making movies will need millions in capital; the proper return of investment is of course an issue for consideration, so are the efforts of all those behind and in front of the camera. The viewers should understand that the copyright pirates are hijacking all these efforts.

According to estimates of the film industry, the pirates accounted for a 30% decrease in box offices, or approximately $300 million. The losses rose to $1 billion if overseas distribution was also included. Since the profits of the pirates do not go back to the movie companies, the decrease in return and increase in risk are putting off investors. This is adversely affecting the livelihood of those working for movies and indirectly suffocating the development of the industry.

Hong Kong produced more than 200 movies a year in its hey day, mesmerizing viewers in southeast Asia. We will not want to see a drain of our talents from Hong Kong and the fall of the "Eastern Hollywood".

For the same reason, pirated compact discs hit the music industry badly, stripping the creators and performers of their deserved return, hindering creativity and affecting the livelihood of people in the industry (including the artists). We should realise that good creations and artists can only come from a healthy music industry. The real way to support your idols is to walk away from pirated copies.

Another cornerstone of Hong Kong's prosperity is the rule of law. All civil and criminal action can only proceed under the law. The Government has in the past year greatly strengthened the laws protecting intellectual property rights. For example, Customs' capabilities to enforce against copyright piracy were enhanced under the Copyright Ordinance enacted in June 1997. The maximum penalty for possessing for trade or business purposes pirated articles is imprisonment of 4 years and a fine of $50 000 per infringing article. The maximum penalty for manufacturing pirated articles is imprisonment of 8 years and a fine of $500 000.

I am glad that the courts are handing down heavier sentences for copyright offences. This shows the judiciary understands the evil that copyright piracy is doing against Hong Kong. I hope to see more heavier sentences as a deterrent.

The effectiveness of the protection for intellectual property hinges on the law and the enforcement. This is why we see so much in vigorous enforcement action. We are glad that at the retail level, copyright piracy at some notorious blackspots have subsided under raids by Customs. Although the mobility of the pirates and the demand for pirated goods have added to our enforcement difficulties, Customs will continue to raid other blackspots, and where necessary, join hands with the Police and other Government departments in their enforcement action.

Apart from the retail level, we also target copyright piracy at source. Since last December, licences are required for the import and export of optical disc manufacturing equipment. This will enable Customs to better trace the movements of such equipment, preventing their being used illegitimately.

The Prevention of Copyright Piracy Ordinance, enacted in March, further requires all optical disc manufacturers to be licensed by Customs, and adds a mandatory requirement for all optical discs manufactured in Hong Kong to bear a permanent source identification code. This allows Customs to effectively monitor the optical disc manufacturing industry and guard against piracy. I have signed the commencement notice for the Ordinance, and it has already come into operation on 29 May. The optical disc manufacturers will have a grace period of three months to apply for licences and comply with the source identification coding requirement.

I hope you are beginning to understand that not only the Customs or the right owners, but cooperation of all is required to effectively protect intellectual property rights and to combat copyright piracy or trade mark counterfeiting.

Some may ask if the Government could enact more severe laws to punish the pirates and introduce a deterrent. It is imperative that a responsible Government should carefully consider every possible solution to a problem. We are now considering whether to introduce new provisions in addition to the existing legal framework. For example, legal liabilities for buyers of pirated products or confiscating criminal proceeds of the pirates are two proposals under our scrutiny. I have to emphasize that we have not reached any conclusions in respect of any proposals and we will not take any moves lightly. I can assure you that every aspect will be examined in detail, and we will also consult the public and the copyright industry. However, we should now concentrate on effectively implementing our existing law.

We all know that we could not litigate or prosecute for each and every ailment . In any advanced society, a high level of civic education will engender respect for other people. Education is the ultimate solution to copyright piracy. While education is a long-term effort, we have already taken our first steps, in collaboration with the copyright industry, and started explaining to students the importance of protecting intellectual property rights.

Intellectual property rights are the pillars of the economy in the 21st century and the rule of the game in international trade. New products and services are the hot commodities of the international market; the continued growth and development of Hong Kong depend on continued improvement and development of high value-added items. The fruits of such creativity will in turn depend on the cooperation of the Government, the authors and creators, and our fellow citizens. Copyright piracy destroys Hong Kong's creative edge, we must be determined in our fight against piracy in order to protect Hong Kong's international trading reputation and business environment.

The first thing we could do to eliminate piracy is to walk away from pirated products. An old Chinese saying teaches us thus : "you must first tend to your mind and body before you can move on to raise a family, rule a country and eventually conquer the world". If we all act conscientiously and fairly, we can overcome the piracy problem.

CHAU Tak Hay

End/Saturday, May 30, 1998

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