Comments and Recommendations of the Hong Kong Institute of Trade Mark Practitioners (in light of review by its Copyright Sub-Committee) concerning the Copyright Bill as gazetted on 21 February 1997


Tom Hope (Chairperson)
Linda De Silva
Nicholas Horvath
Matthew Laight

1 Introduction

This submission relates to the Copyright Bill as gazetted on 21 February 1997. It should be read in conjunction with the Institutes's Comments and Recommendations Paper dated 4 December 1996 on the draft Bill as published by the Government for consultation. In the time available, we have not been able to prepare a Chinese version of this submission.

Generally, the Institute welcomes the revision of Hong Kong's Copyright Laws and the form and substance of the Copyright Bill, and the fact that the Government intends to enact the Bill before 1 July 1997.

It concerns us that the Government has chosen not to adopt certain of the recommendations made by us in that Paper. These are set out below in no particular order of priority. In the concluding section, we identify those issues which the Institute believes are of greatest concern.

Of equal concern is the possibility that the Bill may not be passed into law before 1 July 1997. If so, Hong Kong will have no copyright law until the Provisional Legislature adopts appropriate substitute laws. For this lacuna to be allowed to arise would clearly be detrimental to Hong Kong's standing in the international community, particularly in light of comments made in the latest US Trade Representative's report (April 1997) criticizing the effectiveness of the current copyright regime in Hong Kong. We therefore believe it is essential that the Bill be passed into law by 30 June 1997.

2 How Our Previous Comments Have Not Been Addressed

2.1 Ownership of Copyright (Sections 13-16):

2.1.1 The Institute is extremely concerned that the Government has retained the statutory award provisions for employee works at Section 14(2) which the Institute believes are contrary to TRIPS (ie. because they impose a compulsory licensing scheme, since it is not possible to contract out of the obligation to pay 'an award').

We also believe it is irresponsible to create such a mandatory obligation without at least clarifying the inherent ambiguities of these provisions, including the need to:

  1. clarify the geographical scope of the exploitation to be rewarded (ie. will the reward cover exploitation outside Hong Kong?)
  2. clarify the type of employees who will benefit (ie. must they be resident in Hong Kong or can they be employed overseas?)
  3. clarify the factors by which the court is to assess the "award"
  4. clarify that technological advances which could not have been within the contemplation of the parties when the work was made (because that type of technology/media was not yet conceived) may nevertheless be treated as within their contemplation for the purposes of this section.

2.1.2 We understand that the Government believes this provision will encourage high quality personnel to come to Hong Kong to seek employment. Leaving aside the uncertainties which this provision will create as currently drafted, we believe that the effect of introducing such a measure will be counter-productive; not only does it benefit employees working outside Hong Kong as much as those working inside Hong Kong, it will if anything tend to encourage employment of workers outside Hong Kong by non-Hong Kong companies, which should run less risk of retrospective claims from employees for subsequent exploitation of copyright works.

2.1.3 In short, we believe this section to be wholly misconceived. It is also worthy of note that the Government seeks to exempt itself from the operation of this section (see Section 16).

2.1.4 At the very least, this provision should be amended to allow the parties to contract out.

2.2 Commissioned Works (Section 15(2)):

2.2.1 The Institute believes this provision is similarly misconceived, principally because (like section 14(2)) it over-rides any agreement made between the parties. It amounts to a compulsory licence, which is contrary to TRIPS.

2.2.2 The exclusive licence for commissioned work is not, so far as the Institute is aware, provided for under the laws of any other jurisdiction in the world. If Hong Kong is seeking stability in its laws by basing them on other jurisdictions, to adopt such provisions seems unwise.

2.2.3 It seems unjustifiable to mandate that authors should be liable to be joined in legal proceedings (pursuant to section 109) where they have not consented voluntarily to the exclusive licence arrangements.

2.2.4 If section 15(2) is retained:

  1. The scope of the exclusive licence ("for all purposes that could reasonably have been contemplated ...") adopts similar wording to Section 14(2) and is therefore similarly ambiguous in its scope. The criticisms made above at para 2.1.1 apply equally here.
  2. Section 100 provides for exclusive licences to be in writing. It needs to be clarified whether this also applies for Section 15(2) licences.

2.2.5 At the very least, this provision should be amended to allow the parties to contract out. Without this, the provision encourages assignment of copyright from the author to the commissioner - a "one-way solution".

2.3 Library and Lending Rights:

2.3.1 Section 49 of Division III (exceptions to infringement relating to libraries and archives) has now been expanded to include copying of audio-visual material, such as films and sound recordings for supply to other libraries.

2.3.2 However, no proviso has been imposed along the following lines, namely that:

• any free copying exceptions provided to libraries and archives should be restricted to copying for preservation and replacement of audio-visual items only where replacement copies cannot be purchased at an ordinary commercial price.

• there should be restrictions on multiple copying of the same material and restrictions on copying for other libraries.

• any free copying permitted by libraries and archives should take into account the licensing and sale of copyright material by owners.

2.4 The Internet

2.4.1 The Institute can see circumstances where an ISP could exploit commercially a transmission right in its transmissions. For example, a dial up user will pay an ISP on a time basis for accessing material on the internet. If that user were to re-transmit the material to a second user, the second user would receive the material without having paid the ISP. Such signal theft should be actionable under the copyright laws. The Bill now expressly seeks to deny an ISP this right (see section 8(1)).

This is a matter of policy and the Institute has no particular view on this one way or the other. However, if the Government has taken a policy decision to deny a transmission right to ISPs, then it seems appropriate to impose the same 'carve-outs' for broadcasting in relation to video-on-demand type services as it has created for cable programme services (see Section 9(2)(b)). In fact, we believe that the same exceptions should appear in relation to broadcasting as have been created for cable programme services generally (ie. not just those in relation to Internet services). The Government appears to be assuming that technology will not move on, when all the evidence is to the contrary and that it may soon become possible to provide eg. video-conferencing by wireless telegraphy.

2.4.2 Section 26(4) appears to be aimed at exempting ISPs and other carriers from liability for making copies available. By referring to the 'mere provision of physical facilities', the section does not exempt ISPs who provide a service via the Internet but provide no physical facilities to users. The carve-out should therefore extend to the provision of such services.

2.4.3 Section 65 also creates an exception to the unauthorized 'making available' of copies of a work. This section appears to be poorly worded. Although it is under the heading of 'Works in electronic form', its wording contains no express restriction to that effect. It is so ambiguously worded that it appears to neutralize the effect Section 26 altogether by giving a general right to make a copy of a work for viewing or listening where that copy is made available, whether or not the copy is 'made available' with the authorization of the copyright proprietor. If the intention of Section 65 is to legitimize acts of incidental copying in relation to works in electronic form, it could say so with far less obfuscation than the current draft.

2.4.4 It is also not clear to us why the words `(other than such a copy which was made available to the public)' have been added at Section 64(1). There should be no difference in treatment if the mark is down-loaded remotely or purchased on a disk.

2.5 Section 118 Affidavit

2.5.1 The Institute welcomes the fact that the Affidavit can be used in civil as well as criminal proceedings.

2.5.2 The Institute endorses the requirement to give better particulars of copyright subsistence and ownership in the Affidavit. However, given the open licensing regime adopted in the Bill, it should not be necessary for the deponent to do more than provide a name, address and confirmation that it is not subject to any prohibition order under section 173. (Section 118(1)(b) requires the giving of a domicile, residence and right of abode. For an unpublished work, only one element - which could also be the author's nationality - is required. For a published work, such details are not needed at all.)

2.5.3 Section 118(4)/(5) provide that the Affidavit may only be tendered in evidence if, inter alia, the Defendant does not serve a notice requiring the attendance of the deponent. Therefore, if the Defendant does serve a Section 118(5) notice requiring the attendance of the deponent, the Affidavit cannot be tendered in evidence and the deponents must attend in Court. Defendants can thereby, as a matter of course, serve such a notice so as to frustrate the plaintiff or the prosecution's case. Section 118(12) provides a costs penalty to the Defendants if this were to happen in criminal proceedings, but the Institute is doubtful this will be a real deterrent; if the Defendants are guilty, the risk of an additional costs penalty on top of the risk of fines and/or imprisonment where the upside is that the prosecution may have to drop the case because the deponent cannot attend is hardly likely to be of serious concern. The Institute appreciates that the wording of these provisions is based on the Law Reform Commission proposals at paragraph 19.78 (page 208). However, the Institute believes justice would be better served if the spirit of the LRC recommendation at paragraph 19.69 (page 205) is followed: "that an affidavit under section 118 should be admitted as prima facie evidence of the truth of its contents, subject to a discretion in the court to require the attendance of the witness where the defendant successfully persuades the court that the ownership or subsistence of the copyright is genuinely in issue".

2.5.4 The Institute believes that a more practicable approach would be to treat the copyright affidavit in the same way as a hearsay notice, allowing the judge to give such evidential weight as he thinks appropriate to the affidavit even where it has been objected to by the defence.

2.5.5 Section 118(8)(b) gives the Court the power, of its own motion or if the defendant who has served a notice under subsection (5) satisfies the court that the subsistence or ownership of copyright is genuinely in issue, to require the attendance of the deponent notwithstanding that the Affidavit is admissible in evidence. The Institute believes that the words underlined above are redundant, whether or not the Section 118(5) notice provisions are retained.

2.6 Parallel imports

2.6.1 The Institute recognizes that there are strong views for and against parallel imports being permitted per se, and for and against decriminalization. Members of the Institute represent clients with conflicting interests. The Institute also recognizes that this is one of the most controversial aspects of the Bill now being debated.

2.6.2 Without wishing to add to the controversy, the Institute wishes to point out the inherent ambiguity of the wording of section 35, which (like the UK Act from which it is drawn) does not dispel the uncertainties as to when a parallel import may infringe copyright under the current law. These uncertainties are succinctly set out in Attachment A extract of Laddie Prescott & Vittoria (2nd edition), whose authors advocate a simpler test of whether parallel importation has been authorized or not. Given the controversy presently surrounding these provisions, we suggest that re-wording it along these lines would provide greater certainty and simplicity.

2.7 Articles in Transit

2.7.1 The Institute believes it is wrong for the Copyright Bill to depart from the clearly stated recommendation of the LRC (paragraph 18.2, page 182) that "where pirated goods are concerned...even goods in transit should be subject to seizure". The reasons for this should be self- evident.

2.7.2 There is no exception in TRIPS for goods in transit in relation to border control measures.

2.7.3 Empowerment of Customs & Excise to seize goods in transit does not mean that they are compelled to seize such goods. There should therefore be no unnecessary disruption of the free flow of goods through Hong Kong by giving them such powers.

2.7.4 Section 115(2) should therefore be modified. The Institute is also concerned at the wording of section 132(4) which provides that no application may be made for a detention order "with respect to an article in transit". The evidence upon which such applications will be based is unlikely in many instances to establish whether the goods are intended for Hong Kong or elsewhere; this uncertainty should not be a bar to the application being made.

2.8 Detention Orders

2.8.1 Section 134(2)(b) gives cause for concern, as it is left to the Commissioner to determine the level of the required deposit, which is to be "sufficient to re-imburse the Government for the costs likely to be incurred in connection with the carrying out of the detention order". To guard against excessive deposits being raised, a maximum figure is desirable (as has been provided for in the equivalent Australian legislation, which requires a standard deposit of A$5,000). For Hong Kong, a figure of $30,000 should be workable. Concerns as to how such a figure could be updated to keep pace with inflation can be met by eg. providing for publication in the Gazette from time to time of the figure, as is currently done for eg. the Bankruptcy Ordinance.

2.9 Government Copyright

2.9.1 The Institute is concerned that the broad entitlement to Government Copyright may be used to stifle the giving of legal advice in Hong Kong. For example, practitioners who copy trade mark advertisements from the Gazette to their clients will arguably infringe such copyright.

2.9.2 The Institute suggests that some proviso be made, either generally or specifically for Government copyright, exempting from infringement those who make copies of relevant works for the purpose of giving or obtaining legal advice.

2.9.3 There is precedent for such a provision in Australia's Copyright Act Sections 43 and 104 (Attachment B).

3 New Comments

Compilation of Data Definition

3.1 Section 4(1)(a) departs from the wording of the UK Act by requiring that, to enjoy copyright protection, the compilation of data must 'constitute an intellectual creation'. This is not a recognized term of art under the UK or HK law and goes against the principle that works should be protected irrespective of their 'intellectual' or 'artistic' qualities. We recommend that it be deleted.

Duration of Film Copyright

3.2 Section 19 also departs from the UK Act in making the duration of copyright in a film extend to 50 years from the death of the authors of various types of underlying rights. We presume that the intention is for the duration of the film copyright to end at the same time as any underlying rights in the film. It seems inappropriate that films are being accorded this privilege when sound recordings (which also embody underlying literary and musical works) are not. We also believe that, if such an extension of entitlement is to be given, it should be made clear that it applies only to persons identified in the film credits, so as to avoid uncertainty and excessive due diligence operations.

Seizure by Customs

3.3 At section 124(2), the Commissioner was (by the previous draft) required but now has a discretion to permit the owner of the copyright or the person from whom the articles have been seized to inspect. The Institute believes that the Commissioner should be obliged to allow inspection where the persons in question can be identified without difficulty. It is also not clear what is meant in section 124(3) by 'unnecessary damage'; if the intention is to allow persons eg. to break open sealed items, it seems desirable to say so.

Wording of Section 65 and Sections 163(3)/164(7)

3.4 At section 163(3) and 164(7), the requirement to have regard to whether the Tribunal or courts should be constrained not to make awards which will result in a conflict with a normal exploitation of the work or will unreasonably prejudice the legitimate interests of the copyright owner' seems to give little assistance and to inject additional ambiguity. (The same criticism can be made of Section 65, which is criticized on other grounds at 2.4.3 above.)

Transitional Provisions

3.5 The transitional provisions appear not to exclude the application of sections 14 and 15 to works created before commencement. The Institute recommends the removal of these provisions (see above). If they are to remain, however, it is clearly inequitable that they should apply to works created before such entitlements were dreamt of.

4 Summary

In order of priority, the Institute believes the most important of the issues raised above are:

4.1 Sections 14 and 15 (employee and commissioned works - see 2.1, 2.2 and 3.5 above).

4.2 Compilation of Data Definition (see 3.1 above).

4.3 Allowing S.118 Affidavit Evidence to stand even if challenged (see 2.5.4 above).

4.4 Clarification of Sections 64(1) and 65 (see 2.4.3, 2.4.4 and 3.4 above).

4.5 Modifying the `Articles in Transit' provisions (see 2.7 above).

15 April 1997

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