UNCLAS HONG KONG 004743

SIPDIS

SENSITIVE
SIPDIS

STATE FOR EB/TPP/MTA/IPC/FELSING
STATE FOR EB/IPE
STATE FOR EAP/CM
NSC FOR DWILDER, KTONG
DEPT PASS USTR FOR ACELICO

E.O. 12958: N/A
TAGS: KIPR ECON CH HK
SUBJECT: HONG KONG COURT UPHOLDS WORLD,S FIRST BITTORRENT
IPR CONVICTION



1. (SBU) SUMMARY: On December 12, the Hong Kong Court of
Appeals upheld the 2005 conviction and three-month jail
sentence of a 39-year old Hong Kong man for distributing
illegal copies of American films on the internet. The man
used the BitTorrent peer-to-peer (P2P) file-sharing system to
upload films to the internet where they could be downloaded
illegally by other internet users. Local representatives of
the Motion Picture Association (MPA) expressed support for
the decision, noting that internet piracy is replacing
optical disks as the major source of piracy in developed
economies. MPA noted that last year,s conviction serves as
a deterrent and explains why internet piracy is not as
pressing a concern in Hong Kong as it is in other developed
Asian economies.


2. (U) BACKGROUND: On October 24, 2005, a Hong Kong court
convicted Hong Kong resident Chan Nai-ming of violating Hong
Kong's Copyright Ordinance for distributing illegal copies of
the Hollywood films "Daredevil," "Miss Congeniality," and
"Red Planet" using the popular BitTorrent peer-to-peer (P2P)
file-sharing software. As a first-time offender, he was
sentenced to three-months in prison. This case was
reportedly the first BitTorrent-related conviction in the
world. At the time, local stakeholders and Hong Kong Customs
and Excise Department said that the conviction offered a
strong deterrent against the use of P2P software to share
pirated digital content in Hong Kong. The arrest and
subsequent conviction of Chan resulted, according to Hong
Kong,s Commerce, Industry and Technology Bureau, in a
significant drop in Hong Kong of instances of posting
copyrighted materials on the internet using BitTorrent.


3. (U) During the appeal, Chan,s lawyers argued that his
action of uploading copyrighted materials to the internet was
different from actively &distributing8 the files to others.
His lawyers stated that uploading was simply the passive act
of making the material available, while those who actively
downloaded the material should be held accountable as the
true infringers. Lawyers also argued that the Copyright
Ordinance applies only to "tangible materials," not
electronic distribution of data or files. Court of Appeals
Justice Clare-Marie Beeson rejected both arguments, agreeing
with the lower court judge that uploading films to a public
forum was a form of copyright infringement. She also
concurred with the lower court that the Copyright Ordinance
covers digital distribution.


4. (U) The Court also rejected Chan's contention that the
three-month sentence was excessively harsh, noting that he
could have received up to 4 years in prison. The judge
stated that those using BitTorrent are aware of the criminal
implications of uploading films and that the net harm done to
the copyright owners outweighed the fact that BitTorrent
uploaders do not profit from their actions. Chan began
serving his prison term on December 12, but is expected to
file an appeal to the Court of Final Appeal, Hong Kong,s
highest court.


4. (SBU) Sam Ho of the Motion Picture Association (MPA)
applauded the court,s decision, noting that MPA cooperated
with the Hong Kong Intellectual Property Department on this
case. He noted that internet piracy is replacing optical
disk piracy as the primary form of IPR theft in the region.
The Court of Appeals decision to uphold the conviction and
prison sentence &helps Hong Kong combat the issue. Internet
piracy now is less of a problem for Hong Kong than it is for
other places in the world, particularly Taiwan, where the
practice remains widespread.8

Cunningham