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LC: Speech of SCIT on moving the second reading of the Copyright (Amendment) Bill 2006

    Following is the speech (English translation) by the Secretary for Commerce, Industry and Technology, Mr Joseph W P Wong, on moving the second reading of the Copyright (Amendment) Bill 2006 at the Legislative Council today (March 29):

Madam President,

     I now move the Second Reading of the Copyright (Amendment) Bill 2006.

     The major objectives of the Bill are to enhance our copyright protection system in order to facilitate Hong Kong's development in creative industries and as a knowledge-based economy, and to improve our copyright exemption regime to meet the needs of copyright works users, especially the education sector, for reasonable use of copyright works.  In response to the aspirations of the business sector and general consumers, the Bill proposes to liberalise restrictions in parallel importation.  The Bill also proposes some amendments to improve enforcement efficiency.

     Copyright touches on many diverging interests.  The stance and views of copyright owners and users of copyright works are very often diametrical in nature.  We need to take into account the legitimate needs of users of copyright works, as well as the community's concerns over dissemination of knowledge and information.  With this in mind, we provide exemptions and exceptions as appropriate in formulating the proposals to enhance protection for copyright owners.  In formulating the proposals to improve our copyright exemption regime, we also uphold the basic principles that such proposals should not affect copyright owners' normal exploitation of their work and should not unreasonably prejudice their legitimate interests.

     The Bill was drawn up after two years of extensive consultation.  The package of proposals in the Bill endeavours to strike a balance between the interests of copyright owners and users of copyright works, and to reflect the latest social and technological changes.  I will briefly introduce the major proposals in the Bill as follows.

Copyright Protection

     The first major legislative proposal to enhance copyright protection concerns the scope of business end-user piracy criminal offence. This proposal includes legislative amendments on "business end-user possession offence" and "business end-user distribution offence".  The former originates from the legislative amendments to the Copyright Ordinance in 2000 which criminalised the possession of infringing copies of any categories of copyright works for use in business.  Users of copyright works were concerned that the offence would seriously impede dissemination of information and classroom teaching.  In response to these concerns, the Administration proposed, and the Legislative Council passed in 2001 the Copyright (Suspension of Amendments) Ordinance 2001 to confine the scope of the offence to only four categories of copyright works, namely computer programs, movies, TV dramas and musical recordings.

     Having considered the views received in the public consultation which ended in early 2005 and discussions with relevant stakeholder groups, we propose to maintain the existing scope of business end-user possession offence to the above-mentioned four categories of works.  The Bill proposes to incorporate this arrangement into the Copyright Ordinance.

     To respond to the publishing industry's concerns about business end-user piracy, the Bill introduces a new "business end-user distribution offence" against serious infringing acts involving copying for distribution or distributing infringing copies of four types of printed copyright works.  The four types of printed works are newspapers, magazines, periodicals or books.  Such acts may attract criminal liability if the extent of infringement exceeds certain numeric limits to be prescribed (the so-called "safe harbour") and the acts are done on a regular or frequent basis, resulting in financial loss to the copyright owners.  The "safe harbour" will be prescribed by regulations to be made under the Copyright Ordinance by the Secretary for Commerce, Industry and Technology.

     To avoid adverse impact on classroom teaching, the Bill provides that the proposed offence will not apply to educational establishments which are non profit-making or subvented by the Government.  I understand that book publishers are concerned that with such an exemption, educational establishments may commit serious infringement, thereby impeding the potential market of their works.  I wish to emphasise that these establishments will still attract civil liability if they commit infringing acts.  The Administration will explain clearly to the education sector that the exemption provision will not absolve them from the concerned civil liability for copyright infringement.  We will also actively facilitate the conclusion of licensing agreements between publishers and educational establishments for limited copying by the latter.

     The Bill introduces another criminal liability to promote corporate accountability and responsible governance to prevent business end-user piracy.  We propose that, if a company has done an act attracting business end-user criminal liability, the directors/ partners responsible for the internal management of the company will also be liable unless they prove that they have not authorised the infringing act.  If there is no such director or partner, the person responsible for the internal management of the company under the immediate authority of the directors or partners would be liable.

     When we consulted various organisations and the Panel on Commerce and Industry of the Legislative Council on the preliminary idea of this proposed offence, there were concerns that shifting the burden of proof to the defendant would be too onerous.  I wish to emphasise that the burden of proof on the defendant is only an evidential burden and the defendant will absolve his liability if he can adduce sufficient evidence to raise an issue that he did not authorise the infringing act in question.  To provide directors and partners with clearer guidelines on the type of evidence that the defendant may adduce, we have included in the Bill certain factors that the court may consider (e.g. whether the defendant has introduced policies or practices against the use of infringing copies) in determining whether the defendant has adduced sufficient evidence.

     There are also views that it is very difficult for employees to refuse to engage in infringing acts upon request by their employers.  In response to these concerns, we propose to introduce a new employee defence in respect of "business end-user criminal liability".  However, the defence provision will not apply to those employees who are in a position to make or influence a decision regarding the infringing act.

     We have also taken into account that some professionals (such as lawyers and auditors) may be required to possess or use infringing copies in the course of their normal business.  The Bill provides for the exemption of these professionals from "business end-user criminal liability" under specified circumstances.

     Another major amendment proposal to enhance copyright protection seeks to reflect the development of digital technology.  As it has become increasingly common for copyright owners to store and distribute their copyright works in digital means, more and more of them use technological measures to prevent infringement, for example, by encrypting their works or using special chips to prevent unauthorised digital copying.  The Bill introduces civil and criminal provisions against circumvention of these technological measures which are used to protect copyright works.  However, in formulating these proposals, we need to take into account that such protection should not affect users' legitimate access to copyright works, including legitimate parallel imports, and that it should not hinder technological development.  Therefore we have included appropriate exemptions in the Bill.

     Commercial rental of films and comic books is now very common.  To strengthen protection for copyright owners, we propose the introduction of rental rights for films and comic books, so that the copyright owners concerned may take civil action against unauthorised rental activities.  It is certainly not our intention to stifle the operation and development of the film and comic book rental shops.  We will encourage copyright owners to develop reasonable and user-friendly licensing schemes and adopt a one-stop shop approach as far as possible to handle rental licence applications.  In addition, there is a saving provision in the Bill so that the proposed rental rights will not apply to the existing stocks of the rental shops.  The Bill also proposes to expand the jurisdiction of the Copyright Tribunal to cover licensing schemes regarding renting of copies of films and comic books to the public.  This will enable rental shop operators to refer to the Copyright Tribunal any disputes over the terms of rental licensing schemes.

Copyright Exemptions

     With all the reforms and changes going on in the education sector, school teaching is no longer confined to classroom instruction.  Interactive and project-based teaching, as well as other teaching methods, are also adopted.  Our copyright exemption provisions for education purposes should reflect these changes to allow reasonable use of copyright works by the education sector.  Likewise, public administration has become increasingly complex, and the public expect a timely response from the Government and the Legislative Council when dealing with urgent business.  Hence, the exemption provisions for public administration purposes should reflect such changes.

     Under the existing Copyright Ordinance, acts which are exempted from copyright restrictions ("permitted acts") are listed out item by item.  This approach is rather rigid and cannot easily cater for social changes.  The Bill introduces a general exemption provision for reasonable use of copyright works for the purpose of education and for public administration of urgent business (i.e. the concept of "fair dealing").  The Bill also proposes to make improvements to certain existing permitted acts for education.

     I understand that copyright owners are concerned about possible abuse of the proposed exemption provisions by the education sector.  I wish to stress that these provisions do not allow unauthorised use of copyright works without any restriction.  I also wish to reiterate that the Government will actively facilitate the conclusion of licensing agreements between educational establishments and publishers regarding reasonable use of copyright works.

     In order to meet the special reading needs of persons with a print disability, the Bill provides for a new permitted act so that it is not an infringement to produce specially adapted copies of copyright works for use by persons with a print disability.

Parallel Importation

      Another major amendment in the Bill is the liberalisation in the use of parallel imports.  Under the existing Copyright Ordinance, it is a criminal offence to deal in, or to import otherwise than for private and domestic use, any parallel imported copyright work if the work has been published anywhere in the world for 18 months or less.  Moreover, using a parallel imported movie, television drama or musical recording in business is also a criminal offence.  If the copyright work has been published anywhere in the world for more than 18 months, the above acts will only attract civil liability.

     In formulating the proposals to liberalise parallel importation, we have to be responsive to the aspirations of the general community for the free flow and use of parallel imported copyright works, while taking into consideration the concerns of copyright owners that their interests may be affected.  Having balanced the diverging views, the Bill proposes to shorten the criminal liability period for parallel imported copyright works from the existing 18 months to nine months.  The Bill also proposes to remove the criminal and civil liability pertaining to the use of parallel imported copyright works in business, except for commercial dealing purposes or public playing of movies, television dramas or musical recordings by organisations other than educational establishments or libraries for educational or library uses.  Commercial dealing in copyright works which have been published for more than nine months will continue to attract civil liability.

Improving Enforcement Efficiency

     The Bill also proposes to amend certain provisions to improve enforcement efficiency in combating copyright infringement offences.  The proposed amendments include: (1) to amend the existing time limit for prosecutions against copyright-related offences to three years from the date of commission of the offence, in order to allow the Customs and Excise Department more time to conduct investigation into complicated cases such as those involving overseas copyright works or organised crimes; (2) to introduce new provisions enabling copyright owners in copyright-related criminal cases to prove through affidavits sworn by their authorised representatives that they have not licensed the defendant to do the offending acts; and (3) to clarify the particulars about the author of the work required to be stated in an affidavit concerning copyright subsistence and ownership.


     Madam President, I have only introduced some of the major amendments proposed in the Bill.  There are still others which I am obliged to leave out today.  As the issue of copyright carries wide social implications, we have prepared a booklet using simple language and examples drawn from daily life to explain the Bill to the public.  Copies of the booklet are available for collection and can be downloaded from the Internet as from today.  We will also give Members copies of the booklet.  

     The Administration has the responsibility to introduce timely improvements to our copyright legislation, so as to enhance the protection for copyright owners and cope with the latest social and technological developments.  This is the primary objective of our proposed amendments to the Copyright Ordinance.  In formulating the specific legislative proposals in the Bill, we have endeavoured to strike a balance between the legitimate interests of copyright owners and those of users.  The proposals are drawn up after two years' extensive consultations, including two rounds of detailed discussion with the Panel on Commerce and Industry of the Legislative Council.  This notwithstanding, I am aware that certain amendments may still fail to meet in full the expectations of copyright owners and users.  Comments from stakeholder groups, members of the public and the Legislative Council on the details of the Bill are welcome.  We are prepared to consider making amendments to the Bill if they are justified in the interests of the community as a whole.  Also, I am sure that when scrutinising the Bill, Members may suggest amendments having regard to the different opinions reflected to them.

     Madam President, with these remarks, I look forward to the passage of the Bill after Members' careful scrutiny.

Ends/Wednesday, March 29, 2006
Issued at HKT 14:57