Cablegate: Hong Kong Proposes Updating Ipr Laws to Combat

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UNCLAS SECTION 01 OF 02 HONG KONG 004875

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STATE FOR EB/TPP/MTA/IPC/FELSING
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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)

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Stiffer penalties and criminal sanctions?
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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.

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Privacy Concerns and the Role of ISPs
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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.

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Early Reactions
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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

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