Updating Hong Kong’s Copyright Regime for the Digital Age

After two failed attempts in 2011 and 2014 to amend Hong Kong’s copyright regime due to a severe backlash over concerns about potential abuse and possible restrictions on free speech, the latest amendment is due to finally pass into law.

Gazetted in December last year and due to pass into law on May 1, the Copyright (Amendment) Ordinance 2022 (the “Amendment Ordinance”) would seem to be a lot less controversial than was feared by some sectors.

The main changes to the copyright regime are: –

1. introduction of a technology-neutral “communication right” for copyright owners and corresponding criminal sanctions against infringements of this right;
2. expansion of fair dealing exceptions for use of copyright works, including the introduction of exceptions for parody, satire, caricature and pastiche and media shifting of sound recordings;
3. introduction of “safe harbour” provisions to incentivise online service providers (OSPs) to co-operate with copyright owners in fighting online piracy and to provide reasonable protection for their acts; and
4. addition of two statutory factors for the court to consider when assessing whether to award additional damages to copyright owners in civil copyright infringement suits.
   It should also be noted that there is no significant expansion to the scope of copyright laws in Hong Kong.

Introduction of a communication right

The main focus of the Amendment Ordinance is the introduction of a technology-neutral “communication right” to supplement or replace some of the existing language like “make available copies to the public”, “broadcast”, and “distribution of copies” all of which were unclear. This also brings Hong Kong’s copyright regime in to line with the EU, UK, Canada and Australia.

By replacing “making copies available to the public” with “communicating to public”, the amendment addresses new methods of transmission or distribution where it is unclear whether and how “copying”, “making copies”, “distributing copies” takes place, such as: –

• live streaming;
• non-downloadable VOD (video on demand);
• providing access to works via hyperlinks;
• peer-to-peer (P2P) file transfers.

New criminal sanctions are also introduced for communicating copyrighted work to the public by way of or in the course of any trade or business which consists of publishing to the public for profit or reward; or any communication of such work which would be prejudicial to the copyright owners.

Arguably these acts are already covered by the existing copyright framework of “making available copies to the public”, “distribution of copies”.

In HKSAR v Chan Nai Ming^[1], a netizen was convicted of illegally distributing copies of copyright movies via the P2P file-sharing software BitTorrent.

While the netizen argued on technical grounds that no “copies” had been “distributed”, the Court of Final Appeal soundly rejected this.

However, a problem still exists in the use of the word “communication,” which could use a broader definition.

In the EU there is a long line of pending cases debating whether providing hyperlinks to copyrighted work constitutes “communication to the public”^[2], with the law surrounding a communication right by no means settled despite coming into effect in some jurisdictions around 20 years ago.

It is likely Hong Kong’s courts will face similar debates.

Expansion of fair dealing exceptions

Hong Kong operates under the “fair dealing” doctrine for exemptions to copyright infringement, where there are certain set categories of acts which will not attract criminal or civil liability.

The Amendment Ordinance expands some existing categories as well as adding new categories, the most notable of which are:-

• addition of new exemptions for parody, satire, caricature and pastiche;
• expansion of rights from reporting current events to also include commenting on current events;
• expressly including the right of quotation in the right of criticism or review of published works;
• expanding the scope of permitted uses by educational establishments, libraries, museums, archives;
• addition of new exemptions for OSPs to temporary cache and hosting of data;
• allowing media shifting of sound recordings for private and domestic use, for example converting music from CDs to forms like MP3, or FLAC to listen on digital devices.

The Government rejected calls for the creation of “derivative works”, “secondary creations” or “user generated content” as a new class of permitted act. This may perhaps be inevitable given the competing rights of copyright owners and the difficulty in defining “derivative works” or “secondary creations”^[3].

Introduction of “safe harbour” provisions for OSPs

To provide protection for OSPs and incentives for them to cooperate with copyright owners in combating online piracy, the Amendment Ordinance introduces safe harbour provisions to limit OSPs’ liability for copyright infringement on their platforms caused by users, provided the OSPs take reasonable steps to prevent infringement and take down infringing content on receiving notices.

In conjunction with the commencement of the Amendment Ordinance, the Secretary for Commerce and Economic Development published the Code of Practice for Copyright Protection in the Digital Environment in February 2023^[4], outlining conditions under which OSPs can receive safe harbour protection under the Amendment Ordinance.

These are: –

• the OSP has not received and is not receiving any financial benefit directly attributable to the infringement;
• the OSP accommodates and does not interfere with standard technical measures used by copyright owners to identify or protect their works;
• the OSP designates an agent to receive notice of alleged infringement and make said agent’s contact particulars publicly available;
• the OSP implements a “notice of alleged infringement” system and to take down or disable access to alleged infringing materials upon receipt of notices, and keeps records of such notices.

It should be mentioned that under existing case law, OSPs are generally not liable for alleged acts of infringement committed by users on their platforms unless it is proved the OSPs acted in concert with the users^[5].

The Amendment Ordinance in a sense codifies the existing exemptions afforded to OSPs and implements a takedown system similar to the Digital Millennium Copyright Act (DMCA) of the United States.

New statutory factors for awarding additional damages

Copyright infringement attracts civil liability which is actionable by civil infringement claims by copyright owners.

Generally speaking, damages from civil claims are compensatory in nature and the copyright owner must prove the losses it suffered as a result of any infringement.

As it can be difficult for copyright owners to prove their losses, the current Copyright Ordinance allows the Court to award additional damages having regard to all the circumstances, and in particular, several statutory factors, namely (i) the flagrancy of infringement, (ii) any benefit accrued by the Defendant and (iii) the completeness, accuracy and reliability of the Defendant’s business accounts and records.

The Amendment Ordinance adds two further statutory factors: –

• any reasonable conduct of the Defendant after the infringing act, including any attempts made to destroy conceal or disguise evidence; and
• the likelihood of widespread circulation of infringing copies as a result of the infringement.

Unanswered Questions?

The Amendment Ordinance is generally a positive step forward to update and modernize Hong Kong’s copyright regime.

The Government has however acknowledged there are still unresolved issues such as potential extension of the term of copyright^[6], treatment of data mining, and perhaps the most relevant to today’s discussion – whether works generated by artificial intelligence (AI) should be protected by copyright.

When drafting the Amendment Ordinance, the government consulted the public on some of these outstanding issues, but ultimately decided to first focus on making the amendments proposed in the 2011 and 2015 bills.

It has vowed to regularly review Hong Kong’s copyright law with the possibility of introducing another amendment bill in the future.

Any further changes are likely to depend on how the current amendment plays out in the courts, but given the speed at which technology develops, particularly AI, the government may find it has to move sooner rather than later.

[1] [2007] 2 HKLRD 489

[2] Svensson v Retriever Sverige AB (C-466/12)

[3] The right to creative derivative work is generally viewed as the exclusive right of the copyright owner. In US, derivative works may fall under the “fair use” exemption under certain circumstances; the Copyright Modernization Act 2012 of Canada creates a limited exemption for creating user-generated content for non-commercial use. Other than those, there are no exemptions for creating derivative works or secondary creations in most jurisdictions.

[4] https://www.gld.gov.hk/egazette/pdf/20232707/egn202327071005.pdf

[5] L’Oreal SA v eBay International AG [2009] RPC 21, as applied in Hong Kong in Mary Kay Inc. & others v Zhejiang Tmall Network Co., Ltd. [2021] HKCFI 1403. Please note that the said cases concern trade mark infringement but the same consideration will likely also apply for copyright infringement

[6] The term of copyright protection is life plus 50 years in Hong Kong, which is shorter than life plus 70 years in some jurisdictions such as US, UK, EU, Australia, Japan, South Korea, Singapore.