Editor’s Note:

Recently the Hong Kong Government has released a consultation paper titled “Intellectual Property Protection in the Digital Environment”, proposing to expand criminal responsibility for network piracy and enhance copyright protection. By referencing the suggestions by some copyright holders, the paper introduces criminal punishments for some P2P users who are not authorized to download copyrighted articles, on the account that while downloading, they offer to share previously downloaded parts and documents in specified folders with their peers.

It is uncommon worldwide to seek criminal liability for down loaders. Although according to the laws of France, Germany or Japan, illegal down loaders may be prosecuted, no similar precedents exist for P2P down loaders. In the United States, down loaders will not be subject to criminal punishment unless they have done so for private gains or business interests, or the intentional infringement involves downloading of materials valued at more than a retail price of US$1,000.

It has already been a common cultural phenomenon for global netizens to download audio and video resources by using BitTorrent ("BT”) software or other P2P (P2P) programs. There is no denying that with networked resources, nine out of ten are suspected of involving copyright infringement. However, behind this fact, there is also a culture of sharing, a kind of Great Harmony, to bring together all cultures. Copyright holders are certainly unwilling to share their works free of charge, so they continuously sue P2P technology companies worldwide. As the first region to prosecute BT uploaders, Hong Kong has recently proposed amending its legislation and imposing criminal punishments for infringing uploading and downloading conduct. What are the legal issues involved in uploading and downloading using BT? What are the causes and results of the amendment recommended by the Hong Kong Government? How will the situation evolve once the amendment is formally initiated?

No monetary transactions, no criminal punishments?
In the simulation era, the quality of pirated products was very poor, as videotapes deteriorated with each copying. Also, copying was so inefficient that it was rather difficult to mass-produce pirated products. Things have changed with the coming of the digital era. Once the entire document is copied, the copy is equivalent in quality to the source document because the digital messages use simple binary data. Although everybody was free to copy simulation files in the past, the poor quality reduced the value of the copying. In the digital era, the quality of the copy is assured, so that everybody becomes a miniature “pirate business”, and shares audio and video resources across the Internet. P2P sharing, which has exploded since Napster, has created a harmony in the Internet world. One sustains no loss if they give a copy to others; they can get assured quality with the copy. In this way, the Great Harmony, which was envisioned by the communists, is finally brought into existence on the internet.

The legal issues concerning P2P technology have been raised for a long time ago. The most interesting point is that P2P technology does not involve any transaction of interests. Despite the unwritten custom of “bartering”, P2P platforms essentially do not involve any monetary transactions. According to copyright laws around the world, basically any infringing conduct, which is not intended for profit, does not constitute a violation of criminal laws, but is considered a civil wrong. Moreover, according to the Copyright Ordinance of Hong Kong, the section on copyright infringement provides only that such infringing acts as unauthorized copying of CDs or books, or passing off, which are designed for financial gains involve criminal offences, while other non-commercial uses are categorized as civil wrongs.

To compare a criminal offence and a civil wrong, the former involves the safety and interests of the public and the infringer will be subject to a criminal record, a monetary penalty or imprisonment. The latter involves only a private dispute. Once a civilian’s legitimate right is infringed, he may seek civil remedies, but there is no criminal liability. Here lies the intriguing part of P2P sharing. On one hand, the P2P sharing overtakes piracy in terms of influence, as the biggest, cheapest and easiest channel for infringing goods; on the other hand, it is a selfless form of sharing and cannot be dealt with by criminal means.

Criminal Liability Resulting from Selfless Sharing

The Hong Kong Customs prosecuted the “Big Crook”, an Internet nickname for Chan Naiming, on the grounds of Section 118 (1) (f) – the only applicable provision in the Copyright Ordinance – which states, “A person commits an offence if he, without the license of the copyright owner…distributes (otherwise than for the purpose of, in the course of, or in connection with, any trade or business) an infringing copy of a copyright work to such an extent as to prejudicially affect the owner of the copyright.” This section was originally intended to contain some “predatory price cutting” conduct, such as copying a competitor’s products without authorization and distributing them free of charge, in order to lower sales and lead to the closing down of the competitor and control of the market.

Although the Hong Kong Customs authorities applied the section for another purpose, it succeeded in convicting the accused. It is undeniable that uploading and downloading activity on the internet has brought real economic losses to copyright holders. Law enforcement agencies cannot be criticized for bringing criminal charges as a warning to others. However, there are so many undetermined factors in the case. Firstly, the issue whether the construction of the section is acceptable to the court is still awaiting an appellate decision. Secondly, with respect to the evidence, much of it was established because the accused was “eager” to offer it. If he had strategically decided to hide the evidence, it would have been difficult for the prosecutor to prove that the accused was the person who uploaded the files. More importantly, the current legislation cannot be extended for use in the Internet era or be used to directly accuse the infringers. The judicial body is heavily impeded by this investigational method. The Hong Kong Government intends to get out of its current difficulty through this case.

An amendment, which would add criminal liability for infringement using P2P technology, offers a good solution, as serious consequences would occur if civil cases are treated as criminal ones and the current laws prove to be an ineffective deterrent. In its recent consultation paper, the Hong Kong Government explicitly stated that infringing conduct on networks, whether involving uploading or downloading, would be criminally dealt with. The scope of protection was also extended to movies, songs, TV programs, books and periodicals, as well as every single article or graph on the Internet. The extensive media coverage, and the seeking of criminal liability for downloading conduct have quickly resulted in an outcry in society, among the media and local network users.

Can You Prohibit People from Drinking if You Cannot Stop the Water Source?

In fact, the current concept, which is being applied through the enforcement of laws, is not entirely wrong. Unlike Napster, which operated with a central server, BT technology is decentralized. However, if there is not an initial uploader, the subsequent explosive spreading cannot occur. The customs authorities acted reasonably to crack down on uploaders at the very outset. The problem is that the Internet is different from the real world. We can reduce crimes locally by stopping the source of narcotics, pirated CDs and guns. The Internet, however, is global and far exceeds the control of any law enforcement agency. The data traffic from other countries cannot be permanently stopped unless all outgoing connections are shut down.

In fact, local first up loaders have been few in number, and local netizens download audio and video resources mostly from the Mainland. The Hong Kong Customs authorities would have to travel to the Mainland to arrest the “initiators”. Hong Kong is very different from the Mainland regarding its judiciary and law enforcement. Consequently, it is difficult for the two to coordinate in arresting individual uploaders, and much more difficult to determine which judicature to use in court proceedings. Very complicated problems would ensue. In comparison, it is very simple to download from Mainland websites or other countries websites that even a child could do it. It is more difficult than imaginable to crack down on infringement on the Internet. This is one of the major reasons that the Hong Kong Government decided to amend the existing laws and seek criminal penalties for the downloading.

If a king does not want his people to drink from his exclusive spring, he simply bans the people from drinking any water, as the spring cannot be stopped and the water runs into the rivers and wells. As the infringing uploading on the Mainland and other countries cannot be stopped, the Hong Kong Government seeks to end this trouble simply by prohibiting the downloading. Is the solution that simple?

A double standard

In addition to criminalizing the downloading conduct with the amendments, the Hong Kong Government also desires to enlarge the investigative authority of law enforcement agencies and copyright holders, and to proactively filter out the infringing information across the internet. IP addresses are an important clue for internet crimes. Although IP addresses cannot be used to verify a person’s identity, users that use a group of IP addresses at a specific time, can be traced by enquiring Internet Service Providers (ISPs). According to their licensing agreements, ISPs shall be responsible for providing IP users data in cases where law enforcement agencies conduct criminal investigations. This is an essential channel for searching internet crimes.

However, this channel of enquiry is limited to criminal cases. If copyright holders ask for data from ISPs on account of civil proceedings, ISPs may not allow it. This is problematic. For civil copyright proceedings, copyright holders suffer a disadvantage because they cannot obtain data of suspected infringers from ISPs and thus are unable to claim for damages. Even law enforcement agencies normally have to go through many court procedures before they can request personal data from ISPs. Therefore, with the amendment, the Hong Kong Government hopes to reduce the evidentiary barriers facing copyright holders and law enforcement agencies.

Introduction of fixed penalties and filtering mechanism

In the amendment, another recommendation is the introduction of fixed monetary penalties. Currently the procedure is complex for making accusations of infringing uploading or downloading conduct. The accused must be proven to have actually damaged the interests of the accuser and the percentage of losses incurred by the accuser must be computed. Such trivial procedural matters greatly increase the judicial costs. Also, even if the compensation were granted, it would not be sufficient to cover the litigation costs, which is one of the reasons that copyright holders do not take the initiative to accuse infringing downloaders. With the fixed penalties, the Hong Kong Government wishes to streamline the entire judicial procedure, so that in the future copyright holders may complain to the government without having certified their losses and law enforcement agencies may immediately go to ISPs to confirm the identities and crimes of the accused and soon bring the accused to court. As the procedure is greatly simplified, copyright holders and law enforcement agencies may use fewer resources and charge many more existing infringers, and deter other potential infringers.

Moreover, the Hong Kong Government recommends that a filtering mechanism, which can directly filter out suspected infringing information at ISPs and crack down on sources of infringing articles for local netizens. As mentioned above, currently most of the infringing articles are sourced from the Mainland or other countries. If the downloading can never be stopped, the netizens are simply prohibited from having any contact with the source. This recommendation has caused the biggest uproar among the local people, because it directly impacts the freedom of information upon which the success of Hong Kong has been built. Allowing copyright holders and law enforcement agencies to prevent netizens from having access to information, may violate the basic rights of Hong Kong’s people, as granted in the Basic Law.

Bargaining

Of course, as we are used to bargaining over prices in a free market, the Hong Kong Government, with its strict amendment recommendations, has led the public to seek passage of less strict provisions. However, the “sky high” recommendations are truly frightening. Even if only part of them were passed, it would suffocate the healthy growth of the internet. Undoubtedly copyright holders face a serious challenge now. However, if the government employs public resources to protect copyright holders against any losses, does it mean the public interests are inferior to those of businesses?

Currently the recommendations in the amendment are implicitly intended to facilitate the enforcement of laws. To facilitate the enforcement of laws is not wrong, but it exceeds the proper limits if the public interests are damaged in doing so. The Hong Kong Government has always been proud of its tradition of information freedom. The online filtering mechanism will only lead to the destruction of this freedom. This will not protect the interests of investors but will place them on tenterhooks. Will this be advantageous to Hong Kong’s image? It is even more unrealistic to criminalize downloading conduct and to establish fixed penalties. When we still have difficulty proving littering, how can a law enforcement agency produce evidence of downloading misconduct? As the law enforcer must prove that the party has knowingly downloaded infringing articles before he can possibly prosecute the party, how can he prove it? Does he have to monitor the websites that the netizen connects to? Is this the true face of a government professing freedom of information?

It is a further encroachment on the privacy of Internet users to allow copyright holders to more easily obtain personal data from IP addresses. The Office of the Privacy Commissioner for Personal Data has announced recently that IP addresses are not protected as private because it does not directly concern the personal data of parties. This takes a toll on the privacy of netizens. It is true that IP addresses by themselves do not concern the personal data of parties. However, if an organization has both IP data and personal data, and if the IP addresses are given no protection, it will mean that organizations will be allowed to indirectly confirm the identity of the parties. Obviously this will result in some people in society enjoying more privileges than others. Once copyright holders provide a list of IP addresses, ISPs will hand over the customers’ data. If I have never violated any law or infringed upon any copyright, which party will be held responsible for the disclosure of my personal data? Will ISPs and/or copyright holders compensate me?

Infringing acts go underground

As a matter of fact, the sharing of audio and video resources across the internet had been part of a global trend, which cannot be stopped or prohibited. Traditional media industries are afraid of emerging technologies, which is understandable. However, if they consequently hope to counteract the trend, they will really “kick against the pricks”. Technological development is “human based”. If we ban BT or P2P today, tomorrow they will be replaced by other new technologies. The Record Industry Association of America (RIAA) banned WinMX, a P2P software product. Although the server was closed down, users can still connect to an underground server with a patch. A number of audio and video documents are currently still spreading across the network.

Japan charged Isamu Kaneko, the WinNY developer, with a criminal offense, and Japanese users soon discarded WinNY. However, another P2P program “Share” has risen quietly, which is based on the core techniques of WinNY. It also contains a technique to hide the identity of users, so that it becomes very difficult for law enforcers to find downloaders through IP addresses. The above examples show that the arresting of P2P users warns off only some of the players, but is ineffective against senior players. This will only cause P2P technology to go underground and become secretive.

History tells us that cruel penalties or punishments cannot change the human mind. If people are willing to share audio and video articles across the Internet, to oppose it will be unsuccessful. As the success of AppleiTunesStore has proven, it is more lucrative to go with the trend rather than to fight it. There remains room for the legitimate use of P2P technology. No governments can contain the technology by banning it through legislation. Why has the United States, the country with the largest entertainment industries being impacted by P2P technology, not promulgated regulations similar to those proposed by Hong Kong in its amendment?

My thanks to Hong Kong’s Government on behalf of pirates

It is a fact that the interests of copyright holders need protection, but the public interests need to be protected more. Suppose the day comes when I cannot view a normal website because copyright holders forbid it, or when I am fined because I erroneously downloaded a copyrighted video clip, or when I am charged by law enforcers who have exceeded their duties because I selflessly shared some documents that even the copyright holder would not bother to investigate. Then I may return to embrace pirated CDs, because the purchase of pirated CDs has not been criminalized.

In an interview with Stephen Selby, Director of Intellectual Property Department, HKSAR, in Beijing on March 27, our journalists learned that the consultation paper was released and advocated by some copyright holders. These copyright holders, including those in the fields of music and movies within and without Hong Kong, desire for the scope of criminal liability to be enlarged to crack down on the unauthorized uploading and downloading activities in Hong Kong. Stephen Selby said that the release was intended to invite the public to participate and solicit their opinions, and that the consultation paper does not represent the stance of the Hong Kong Government. He advised that the government would make correct legislative recommendations after the public has reached a common understanding on the matter. If no common understanding can be reached, it will be very difficult for the consultation paper to pass the Legislative Council.

Liang Feng is a network IT observer in Hong Kong.