VZCZCXRO2986
RR RUEHCN RUEHGH RUEHVC
DE RUEHHK #2252/01 2411030
ZNR UUUUU ZZH
R 291030Z AUG 07
FM AMCONSUL HONG KONG
TO RUEHC/SECSTATE WASHDC 2754
INFO RUEHOO/CHINA POSTS COLLECTIVE
RUEHIN/AIT TAIPEI 4649
RUCPDOC/DEPT OF COMMERCE WASHDC
RHEHNSC/NSC WASHDC
RHEHAAA/WHITE HOUSE WASHDC

UNCLAS SECTION 01 OF 03 HONG KONG 002252 
 
SIPDIS 
 
SIPDIS 
 
STATE FOR EAP/CM AND EEB/TPP/MTA/IPC, STATE PASS USTR FOR 
MCCOY, BAE AND CELICO, NSC FOR TONG AND WILDER 
 
E.O. 12958: N/A 
TAGS: ECON KIPR ETRD HK
SUBJECT: HONG KONG'S NEW COPYRIGHT AMENDMENTS WELCOMED BY 
INDUSTRY 
 
¶1.  Summary: After more than a year of consultations with 
industry and consumer protection groups, the Hong Kong 
Government (HKG) has passed amendments to the Hong Kong 
Copyright Act.  Industry associations and IP rightholders are 
pleased with revisions that lower the bar for Hong Kong 
Customs to initiate criminal cases, increase penalties for 
circumvention of technical protection measures, and hold 
company directors criminally liable if their companies use 
counterfeit products in the course of business.  A compromise 
measure to relax restrictions on parallel imports met with 
industry approval but fair use provisions for educational 
institutions were criticized as overly broad.  IPR protection 
groups are expecting the HKG,s next step will be to create 
digital protection laws; a discussion paper is currently 
being drafted and should be published before the end of the 
year.   End Summary. 
 
¶2.  Comment: The June passage of these amendments to the 
copyright law is a positive development for Hong Kong,s 
copyright protection framework.  The amendments updated a law 
that had last been revised in 2001 and had fallen behind the 
times.  The HKG deserves high marks for its willingness to 
consult with intellectual property rightholders who were 
generally pleased with the changes to the law.  However, Hong 
Kong authorities have yet to address digital rights 
management, need more serious enforcement actions against 
counterfeit pharmaceuticals, should consider reforms to the 
legal system that makes civil remedies prohibitively 
expensive, and provide legal recognition of U.S. copyright 
registrations.  Some rightholders complain that the 
consultation process took too far too long and are waiting to 
see whether enforcement action will follow.  Rightholders 
agree that Hong Kong's IPR protection remains a model for the 
region in many ways, but has fallen behind others in the 
region in some sectors.  End Comment. 
 
============================================= 
Director,s Liability for Infringing Workplace 
============================================= 
 
¶3.  A lengthy consultation process concluded June 27, 2007 
with the first revisions to Hong Kong,s copyright laws since 
¶2001.  Among the more significant provisions is the 
establishment of criminal liability for company directors 
found to be using copyright infringing products in the course 
of business.  Directors and partners can escape criminal 
liability if they can show that they were unaware, did not 
authorize and specifically took steps to prohibit use of 
infringing products.  These steps can include budgeting funds 
to purchase legitimate product and demonstrating policies, 
practices, and actions designed to prohibit and prevent the 
use of counterfeit products in the workplace. 
 
¶4.  Employees may also be held liable for use of infringing 
products in their work, but can escape liability if able to 
demonstrate that they were not in a position to authorize 
installation or removal of infringing materials.  Local 
business associations, including the Hong Kong General 
Chamber of Commerce and the Chinese Manufacturing Association 
of Hong Kong, raised concerns that business leaders would be 
unfairly forced to bear liability for the actions of their 
staff, while the Business Software Alliance (BSA) complained 
that the law continued to leave a large loophole for 
directors and partners to avoid prosecution.  Although the 
law officially went into effect when gazetted on July 7, the 
Hong Kong government plans to conduct educational activities 
to ensure business owners are aware of their obligations and 
can correct any shortcomings.  The director liability 
provisions are not expected to be enforced before the 
beginning of 2008. 
 
============================================= ========= 
Support for Technical Protection Measures Strengthened 
============================================= ========= 
 
¶5.  The International Federation of Phonographic Industries 
(IFPI) was particularly pleased with the addition of criminal 
liability for circumvention of technical protection measures 
(TPMs).  (Note: previously TPM circumvention was only a civil 
offense and police would not pursue investigations against 
violators.  End Note.)  Businesses providing TPM 
circumvention services or devices, regardless of whether they 
charge for the service or device will now be held criminally 
liable.  A person using such a service or device can be held 
civilly liable under the amended law.  While there are some 
 
HONG KONG 00002252  002 OF 003 
 
 
limited exceptions to the TPM circumvention regulations for 
research and security testing, IFPI representatives in Hong 
Kong told econoff the industry "got everything it wanted" in 
the current law. 
 
========================================= 
But Parallel Import Restrictions Loosened 
========================================= 
 
¶6.  The amendments also relaxed restrictions on parallel 
imports, reducing the period in which parallel imports are 
prohibited from 18 to 15 months of the release of the work. 
This was a compromise with industry; the original proposal 
had called for reducing the prohibited period to 9 months. 
Representatives from the Motion Picture Association of 
America (MPAA) were pleased with the results of their 
consultation with the government and told econoff that 
because the amendments set the date of official video 
release, not the film release, as the effective date for 
protection to begin, film makers could actually benefit from 
an increased period of protection under the new law. 
 
========================================= 
Fair Dealing Still Not Fair Says Industry 
========================================= 
 
¶7.  The IPR-protection associations criticized the 
liberalization of "fair dealing" provisions as overly broad 
and open to abuse by Hong Kong,s numerous commercial 
educational institutions.  These provisions allow educational 
institutions to use portions of copyrighted works for 
educational purposes as long as certain subjective 
requirements are met.  The amendments also allow a specified 
number of copies to be made under a "safe harbor" exception 
-- the allowable number is determined by the number of 
copies, the percentage copied and the retail cost of the 
work.  Copying of newspapers, magazines, books and 
periodicals beyond the safe harbor limits will now be a 
criminal offense.  The Hong Kong government has responded to 
industry criticisms by noting that the fair dealing 
provisions are based on U.S. regulations.  The Hong Kong 
Commerce and Economic Development (HKCED) Bureau is currently 
drafting implementing regulations and expects to issue them 
before the end of 2007. 
 
========================================= 
Coming Attractions: The Digital 21 Agenda 
========================================= 
 
¶8.  Hong Kong has periodically conducted a review of its 
digital technology laws since 1997, with an eye towards 
improving infrastructure, promoting innovation and creating 
the legal environment that will allow digital content 
industries to thrive.  The 2007 Digital Agenda consultation 
paper was circulated in October 2006 and received over 70 
comments.  An April 2007 Digital Agenda Forum, organized by 
Sin Chung-kai, the Information Technology Functional 
Representative in the Legislative Council (LegCo), drew 
additional comments from the public and industry.  HKCED is 
currently in the process of reviewing the comments and 
drafting legislation that will address questions of ISP 
liability, codifying notice and take-down requirements, and 
considering whether current criminal liability provisions for 
uploading copyright infringing materials can be extended to 
cover downloading as well. 
 
¶9.  According to CED, draft proposals could be ready for 
public consultation before the end of 2007 but are unlikely 
to be considered by the LegCo in this session.  The current 
LegCo session will close in 2008.  Any legislation not passed 
before that time will need to be reintroduced in the newly 
elected LegCo.  Given that a major revision of the copyright 
law has just been passed and the difficulty of soliciting and 
responding to comments before the end of the current LegCo 
session, CED plans to submit the draft to the new Legislative 
Council for consideration late in 2008. 
 
=========================== 
Still Areas for Improvement 
=========================== 
 
¶10.  Intellectual property protection associations were 
pleased with the results of their consultations with the HKG, 
but pointed out that Hong Kong is falling behind in some 
important areas.  Hong Kong,s slow consultation process 
 
HONG KONG 00002252  003 OF 003 
 
 
means that downloaders and users of pirated media will 
continue to be free from criminal sanctions.  High legal fees 
make the cost of civil action prohibitive, allowing violators 
to continue their infringing activities with impunity. 
Trademark violations in company registrations continues to be 
a problem and Hong Kong authorities still do not provide 
legal recognition of U.S. copyright registrations. 
Rightholders complain that the HKG is unwilling to share 
information on IPR crimes that could be used to pursue 
cross-border IPR investigations and are discouraged by Hong 
Kong's lack of enthusiasm for prosecuting pharmaceutical 
counterfeiting and transshipment cases. 
Cunningham