VZCZCXRO6164
PP RUEHCN RUEHGH RUEHVC
DE RUEHHK #4875/01 3630358
ZNR UUUUU ZZH
P 290358Z DEC 06
FM AMCONSUL HONG KONG
TO RUEHC/SECSTATE WASHDC PRIORITY 9953
INFO RUEHOO/CHINA POSTS COLLECTIVE PRIORITY
RHEHNSC/NSC WASHDC PRIORITY
RUCPDOC/USDOC WASHDC PRIORITY

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