HONG KONG PROPOSES UPDATING IPR LAWS TO COMBAT

UNCLAS SECTION 01 OF 02 HONG KONG 004875 SIPDIS SENSITIVE SIPDIS STATE FOR EB/TPP/MTA/IPC/FELSING STATE FOR EB/IPE STATE FOR EAP/CM NSC FOR DWILDER, KTONG USDOC FOR MCQUEEN DEPT PASS USTR FOR ACELICO, RBAE DEPT PASS TO USPTO FOR BMCCAFFREY, TWILLIAMS, SLEWIS E.O. 12958: N/A TAGS: KIPR ECON CH HK SUBJECT: HONG KONG PROPOSES UPDATING IPR LAWS TO COMBAT DIGITAL PIRACY REF: A. A) HONG KONG 4635 ¶B. B) HONG KONG 4743 ¶1. (U) SUMMARY: On December 19, the Hong Kong Commerce, Industry and Technology Bureau (CITB) published 'Copyright Protection in the Digital Environment' a public consultation document to address internet piracy in Hong Kong. The document proposes that the Hong Kong government (HKG) institute criminal liability for illegally uploading/downloading copyright materials, create a blanket clause in the Copyright Ordinance to cover copyright infringement using any form of digital technology (current and future),mandate Internet service providers (ISPs) retain records of their clients, online activities for longer periods of time, and hold ISP,s liable if their clients commit flagrant online piracy. It remains unclear what laws or regulations, if any, the HKG will put forward after the public consultation process period ends in April 2007. Representatives from the film and recording industries expressed support for the consultation process and urged quick implementation of new regulations, but internet privacy groups expressed dismay over the potential loss of privacy rights. ISPs criticized the government, claiming that the proposals would be too costly and could stifle technological creativity, innovation, and information flow. END SUMMARY. ¶2. (U) In announcing this "digital agenda" initiative, Hong Kong Secretary for Commerce, Industry and Technology Joseph Wong stated that recent technological advances mandate Hong Kong once again review its copyright laws as they relate to internet piracy. He noted that a proactive approach to internet IPR infringement would improve the city's reputation as a trade and commercial center, but the HKG has not yet committed itself to any of the internet safeguards proposed in the consultation document. Public statements by Wong and other CITB officials underscore the need for careful deliberation and a 'balancing' of competing interests, such as personal privacy protection, the free flow of information online, the development of Hong Kong as an internet services hub, and the importance of promoting innovation in Hong Kong. (NOTE: Hong Kong already proposed amending it's copyright ordinance, but the existing amendment -- currently under debate in the Legislative Council -- does not focus specifically on the internet and digital environments. This new public consultation on digital piracy is in addition to the existing copyright amendment. END NOTE) -------------- Stiffer penalties and criminal sanctions? -------------- ¶3. (U) Stakeholder concerns and the successful BitTorrent prosecution (reftel B) have underscored to government and industry groups that online pirates increasingly use new technologies to mass produce and distribute copyrighted works around the world from Hong Kong. The HKG fears that this growth in online piracy could undermine the city,s role as a regional entertainment and technology hub. Therefore, Hong Kong is considering whether to criminalize unauthorized filesharing of copyrighted works on the internet. CITB has yet to determine the extent of criminal liability for illegal filesharing, but proposed three scenarios for consideration: 1) criminalizing all unauthorized downloading, including downloading of songs, movies, articles and photographs; 2) criminalizing illegal filesharing using peer-to-peer (P2P) technology for songs and movies; and 3) criminalizing only large-scale filesharing activities and those that result in commercial profit. ¶4. (SBU) CITB is also deliberating whether to implement a blanket protection for all copyrighted works transmitted through digital means. This clause could lead to either criminal or civil sanctions and would apply to P2P technology, internet television signals, 3G technology, other mobile digital devices, and any future technology. CITB maintains that this blanket approach would ensure that local customs, police and court officials always have effective tools to combat IPR infringement in a fast-changing technological era. ¶5. (U) To address stakeholder concerns regarding the high HONG KONG 00004875 002 OF 002 cost of bringing a civil claim to court, the HKG also is examining whether to follow the United States and Singapore in implementing statutory damages for online copyright infringement. The consultation document proposes that statutory damages should depend on the nature of the piracy act and the economic benefit gained through piracy. -------------- Privacy Concerns and the Role of ISPs -------------- ¶6. (U) CITB also is examining the introduction of civil liability for ISPs if they fail to address online copyright violations in a proactive manner, such as failing to remove infringing materials or not blocking access to infringing sites. ISPs claim that that they cannot and should not monitor all the activities of their customers. They argue that such actions would increase costs and make Hong Kong a less attractive place for technology and internet companies to conduct business. ISPs and other public interest groups also warn that forcing ISP,s to remove or block access to material on the internet could limit public access to information as the fear of liability could prompt ISPs to overzealously block non-infringing material. ¶7. (U) As an alternative to introducing civil liability for ISPs, CITB is examining new industry guidelines and mandatory codes of practice to combat piracy. One such regulation would mandate that ISPs keep a log ) possibly up to two years ) of their clients, internet activity, which law enforcement and rights holders could access more easily. As part of this program, Hong Kong is exploring creating a mechanism for rights holders to request information from ISPs on clients who they believe are engaged in online piracy. However, CITB has asked for stakeholder and public views on how this mechanism should be structured and who (ISPs, the government, or rights holders) should bear the costs. As in all the proposals, Hong Kong is examining how other advanced economies ) the U.K, Singapore, Australia, Canada, and the United States ) handle this issue with much of the focus on the Digital Millennium Copyright Act. -------------- Early Reactions -------------- ¶8. (SBU) Representatives of the Hong Kong Internet Society and ISP Association balked at the proposals for ISPs to assume more responsibility in fighting piracy, citing privacy concerns and the enormous expense of record keeping. If implemented, they urge the government to develop clear guidelines for sharing and safeguarding online activity records to protect customer privacy. They also caution that legal liability for ISPs could create a hostile operating environment for providers in Hong Kong, and "drag Hong Kong,s internet development backward." The ISP Association also feels that the costs of liability and monitoring would force providers to increase monthly service fees. Alice Lee, a Hong Kong University intellectual property law professor, voiced concern over the blanket protection proposal because it would give too much power to copyright holders. Lee claims that Hong Kong can use existing laws to fight the most flagrant abusers of intellectual property and that a blanket protection to cover future technologies would impede innovation and reduce the free flow of information. ¶9. (SBU) Ricky Fung of the International Federation of the Phonographic Industry (IPFI) urged swift discussion and implementation of the proposals, which would improve law enforcement ability to keep up with new forms of intellectual property theft and help the recording industry recover from years of online piracy losses. Woody Tsung of the Hong Kong, Kowloon and New Territories Motion Picture Industry welcomes the possibility of criminal sanctions for illegal downloads, stating that Hong Kong,s BitTorrent prosecution has reduced, but still not squashed, the practice. Sam Ho of the Motion Picture Association concurs that strict penalties are the best deterrent for online piracy, which has replaced optical disk piracy as the main IP threat to the industry. Sakaue