Introduction

The government introduced the Copyright (Amendment) Bill 2011 (the “Bill”) to the Legislative Council (the “Legco”) in June 2011 with an aim to strengthen copyright protection in the digital environment. The consultation period ended in December 2011.The second reading debate of the Bill has been postponed due to the concernregarding the criminal liability of making parody or derivative works.This article aims to revisit the current Copyright Ordinance and review the newly introduced provisions in the Bill in relation to the definition of prejudice caused to copyright owners.

Existing Copyright Ordinance

Section 118(1) of the Copyright Ordinance, Cap. 528 (the “Ordinance”),stipulates that “a person commits an offence if he, without the licence of the copyright owner of a copyright work- …(g) distributes an infringing copy of the work (otherwise than for the purpose of or in the course of any trade or business which consists of dealing in infringing copies of copyright works) to such an extent as to affect prejudicially the copyright owner.” However, the Ordinance does not define clearly the scope of “such extent”.

Criminal Provisions in the Bill

In clause 51 of the Bill, the government provided some guidance by introducing sections 118 (2AA) and118(8C) to the Ordinance to include a non-exhaustive list of factorsto clarify the definition of “prejudice”, such as the mode of distribution and the displacement effect on the potential market for the work.

According to those provisions, the Court may take into account all the circumstances of the case when deciding what would be amounted to “prejudice” and in particular, including but not limited to, the purpose of the distribution/ communication, the nature of the work, including its commercial value and the economic prejudice caused to the copyright owner as a consequence of the communication including the effect of the communication on the potential market for or value of the work.

Concerns from Stakeholders

Some stakeholders expressed worries that the Bill would suppress the freedom of expression.There were comments that the wordings “effect of the communication on the potential market for or value of the work” are ambiguous and “prejudice” may not be limited to economic prejudice, but it may also include psychological effect on and the goodwill of the copyright owner.

“More than Trivial Economic Prejudice”

The government has responded by introducing the “more than trivial economic prejudice” concept with the following factors to be considered:-

1. the nature of the work, including its commercial value;

2. the mode and scale of distribution; and

3. whether the infringing copy so distributed amounts to a substitution for the work.

The above test serves to provide guidance to the Court in determining whether any communication of the work to the public is made to such an extent as to affect prejudicially the copyright owner. Therefore, it is the government’s view that under the Bill, a parody in general will not substitute the original work and therefore will in no way hamper the legitimate markets of the original work.

Exemption of Parody

The public in response pressed for the full exemption of the parody in the Bill, and requested the government to withdraw the Bill and commence consultation regarding full exemption for derivative works before the resumption of the second reading debate by the Legco.

The government takes the view that the exemption may change significantly the existing balance of the interests between copyright owners and users under the Ordinance.Hence, consultation to the public is needed before exemption can be introduced.

The Bill is yet to be resumed for the second reading debate.The public, especially for those who are involved in making parody or derivative works, should pay attention to the development regarding the passing of the Bill.