HKSAR v. CHAN NAI MING

HCMA 1221/2005

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MAGISTRACY APPEAL NO. HCMA 1221 OF 2005

(ON APPEAL FROM TMCC 1268/2005)

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J U D G M E N T

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Background

1.  The Appellant was convicted of three charges of “attempting to distribute an infringing copy of a copyright work (otherwise than for the purpose of, in the course of, any trade or business) to such an extent as to affect prejudicially the owner of the copyright, without the licence of the copyright owner, contrary to sections 118(1)(f) and 119(1) of the Copyright Ordinance, Cap. 528 and section 159G of the Crimes Ordinance, Cap. 200.  He was sentenced to three months’ imprisonment on each charge and the sentences were ordered to run concurrently.  The Appellant appealed against both conviction and sentence.

2.  The trial in the Magistracy before Mr Colin MacIntosh lasted for 4 days.  The Appellant was represented by Mr Paul Francis; on appeal Mr Kevin Pun, of counsel, appeared for him.  Mr Hayson Tse SGC appeared for the Respondent at trial and, he, with Mr Richard Turnbull SADPP, appeared on the appeal.

3.  There were three alternative charges, (numbers 4 to 6), of Obtaining access to a computer with dishonest intent, contrary to section 161(1)(c) of the Crimes Ordinance, Cap. 200.  As the Magistrate found counts 1 to 3 proved, no verdicts were needed on the alternative charges, which fell away.  The Magistrate commented on these charges [B131] but specifically made no findings, so for the purposes of this appeal those comments were ignored.

4.  Section 113 of the Magistrates Ordinance, Cap. 227 sets out the basis on which an appeal can be heard – as the Magistrate did not make a finding on the alternative charges there is no conviction, order or determination from which an appeal can be heard.

The BitTorrent System

5.  The charges arose from the Appellant’s manipulation of BitTorrent technology.  BitTorrent is a system which efficiently delivers packets of digital information, which, when put together, create a large file e.g. a film, which can be viewed.  The system starts when an uploader (Appellant) puts a film onto a computer linked to the Internet (the seeder computer).  The film can be from a genuine DVD or VCD.  The uploader creates a .torrent file on the seeder computer.  This contains, amongst other things, the contact information for the seeder computer, i.e. its IP address.  The .torrent file is not a copy of the film.

6.  Next, the existence of the .torrent file is published on the Internet, usually through a newsgroup.  The uploader activates the .torrent file of the seeder computer, which is connected to a tracker server, a computer which links downloaders with the seeder computer and with one another. 

7.  Downloaders obtain the IP address of the seeder computer from the .torrent file published in the newsgroup.  The tracker server identifies the seeder as a computer which has the whole film installed, i.e. a complete file.  The first downloader downloads the .torrent file to his computer and activates it, thus connecting through the tracker server to the seeder computer, allowing the download to proceed.

8.  Downloading occurs by “packet switching”, which breaks a large file such as a film into small packets of digital information, which are sent from one computer to another.  The first download from the seeder computer goes to a downloader computer which has activated the .torrent file and accessed the seeder through the tracker server.  If there are a number of downloaders, they will receive packets from the seeder and from other downloaders.  Second and later downloaders will take packets from the seeder, the first downloader and from one another.  They will upload packets to other downloaders, including those from which they themselves are receiving packets.  Packets are transferred as required amongst all the computers linked through the tracker server.  Once a downloader has a complete file, the packets are automatically arranged in correct order so the film can be viewed.  If a downloader remains connected through the tracker server, such a computer can become a seeder.

9.  During downloading it is essential that the original seeder computer remains connected to the Internet.  Even if the connected downloaders have amongst them all the packets necessary for a viewable film, the seeder computer, which has the whole file installed, must remain connected, at least until one of the downloaders has a whole file.

The prosecution evidence

10.  The evidence, in essence undisputed, was that on 10 January 2005, a Customs Officer, Chan Tse-lai, (PW1), while browsing a movie newsgroup in Hong Kong, saw a reference to “Big Crook” (Appellant’s nom de guerre) having uploaded a file for a film called “Daredevil” to the BitTorrent newsgroup.  Images of inlay cards from the film were shown, which had a picture of a statuette and a .torrent file.  PW1 downloaded the .torrent file and obtained from it the seeder’s IP address.  This was where the source seeder was located, i.e. the Appellant’s computer.  Forty other downloaders joined the group.  The officer succeeded in downloading the whole film, as did two of the other downloaders, before the connection was broken.

11.  On 11 January 2005, the same procedure was followed with two more films, “Red Planet” and “Miss Congeniality”.  The officer obtained a full copy of each of those films as did two other downloaders.  All the downloaded copies of the films were confirmed to be infringing copies.

12.  The IP address led Customs and Excise officers to the Appellant’s home, which was raided.  He was the account holder of the IP address.  The computer which he used; the camera used to make the images of the inlay cards and various discs were seized, including three VCDs containing the films referred to.  They were genuine copies of copyright works.

13.  The Magistrate found that the Appellant was not carrying out this activity for the purpose of, in the course of, or in connection with, any trade or business.  It was not disputed that the copy of each film, once installed on the Appellant’s computer, was an infringing copy.

Magistrate’s Findings at Trial

14.  After assessing the factual evidence the Magistrate made a specific finding on the question of whether the Appellant’s activities, as proved or admitted, amounted to distribution.  The finding appears below.

Distribution

15.  This was the first prosecution under this particular sub-section.  At trial, there were extensive arguments on whether the Appellant’s conduct, once it had been established, amounted to distribution of an infringing copy.  The term “distributes” is not specifically defined in the Ordinance but the Magistrate found no ambiguity in the terms of section 118(1)(f), and the question for his decision was whether the conduct described fell within that section.

16.  The basic argument for the Appellant was that his act was confined only to making the films available for others to download and that the term ‘distribution’, as in the sub-section, must mean a positive act.  As the acts done were those of the downloaders, not the Appellant, his role was passive.  It was argued that after the publication of the .torrent file on the newsgroup website, the seeder/Appellant’s computer remained passive and it was not therefore, distributing the material.  Accordingly, no criminal offence was committed by the Appellant, although there might be some civil liability owed to the copyright owner.

17.  The Magistrate dismissed that argument and found that the acts of the Appellant amounted to distribution within the ordinary meaning of that word, which he took to be its meaning in section 118(1)(f):

“The defendant loaded the files into his computer, he created the .torrent files, he created the images of the inlay cards and imprinted them with his logo, the statuette; he published the existence of the .torrent files, and the names of the films in question, on the newsgroup, so that others would know where to go to download.  He said, in effect, “Come here to get this film if you want it.”  He activated the .torrent file, so as to enable others to download.  He kept his computer connected and the BitTorrent software active to allow the downloading to take place.  The downloading involved the dissemination of the data comprising the infringing copies.  His acts were an essential part of the downloading process and were continuing throughout the downloading, even if he had not been sitting at the computer at all times.  These acts were an integral part of the enterprise of downloading the infringing copies to other computers.  This amounted to distribution.  I might add, that given that the intention of the defendant, inevitably inferred from his acts, was to distribute the infringing copies; and given that his acts were more than merely preparatory to such a distribution, he was, at the very least, attempting to distribute.”

“I am sure that it would be straining the language to breaking point to conclude that the defendant’s acts did not constitute, or might not have constituted, a distribution of the films which are the subject of the charges.  This was not merely “making available” the BitTorrent files.  These were positive acts by the defendant, leading to the distribution of the data.  He intended that result.  In no way can the defendant’s involvement in the downloading of this material be properly described as passive.  The fact that the recipients of the packets of data, originating from the defendant’s computer, might have received it by indirect routes does not alter the nature of the defendant’s act of distribution.” (B129 B130)

18.  Having found that distribution had been established the Magistrate next considered whether prejudice to the copyright holder had been proved.  A summary of that finding follows.

Prejudice

19.  The Magistrate considered the meaning of “affect prejudicially”.  He found it was wide in scope and not necessarily restricted to economic prejudice, although that was the obvious area at which the section was directed.  In his view the correct analysis was that the Appellant must have intended to distribute much more widely than to one downloader, the Customs Officer, and thus his acts amounted to an attempt to distribute to such an extent as to affect prejudicially the copyright owner.

“It is evitable that distribution to 30 or 40 or more downloaders would involve prejudice to the copyright owners through unauthorised distribution of their intellectual property and lost sales.  And though lost sales, in the context of the evidence in this case, might be small, nevertheless, such losses would amount to a prejudicial effect.” (B130 B131)

20.  The Magistrate found that potential lost sales were not the only measure of prejudice.  There was the effect on the movie rental market to be considered; further, the existence of counterfeit items tended to degrade the genuine article and undermine the business of copyright owners.

21.  The Magistrate found “It was a distribution in a public open forum where anyone with the appropriate equipment could obtain an infringing copy from the defendant.  The technology has developed to such a point that the prejudice to the copyright owners when their films are distributed in this fashion is, in my judgment, manifest.  And these were attempts to commit the offences even if the completed offences had not been committed.” (B131)

22.  On appeal the matter relating to prejudice was not pursued further except as a factor relating to sentence.  The arguments about distribution were resurrected in an enhanced form.  An additional argument was mounted on appeal, one that had not been canvassed at trial and thus had not been decided by the Magistrate.  This was that the word ‘copy’, was intending to refer only to tangible physical entities.  Thus it could not refer to a copy such as that held electronically or digitally on the hardware of the Appellant’s computer.

Perfected Grounds of Appeal against Conviction

Ground 1

23.  The Magistrate erred in law by failing to recognise that the offence under section 118(1)(f) of the Copyright Ordinance (Cap. 528) is concerned with distribution of infringing copies, and not merely distribution of data/information.  Consistent with this error, the Magistrate failed to take note of the meaning of “copy” as defined in section 23(2) of the Copyright Ordinance, which requires that a “copy” must be in a “material form”, i.e. a physical material entity. 

24.  Consequently, the Magistrate erred in law by: -

(a)     confusing the concept of distribution of data/information with distribution of copies, and equating the former with the latter;

(b)    failing to recognise that distribution of copies in the context of the Copyright Ordinance must involve distribution of physical material entities.

Ground 2

25.  The Magistrate erred in law by finding the Appellant’s acts constituted a distribution (or an attempted distribution) of the films the subject of the charges under section 118(1)(f) of the Copyright Ordinance: -

(a)     The finding is contrary to the evidence of the Prosecution expert, which clearly suggested that the downloading process of each downloader using the BitTorrent technology was initiated by the downloader himself and that it was the downloader’s own decision which directly caused the creation of the copy in the downloader’s computer.

(b)    The Magistrate’s reasoning (Appeal Bundle, p. 129, paras. 35 & 36) at most supports the contention that the Appellant’s acts played a crucial part in facilitating or assisting the downloaders in making copies in their own computers.  It does not lead to the conclusion that the Appellant’s acts amounted to distribution of copies as the making of the copies was initiated and directly caused by the downloaders themselves.

Ground 3

26.  This ground related to the fact that although the Magistrate did not deliver verdicts on the alternative charges, he nevertheless expressed his view that the charges could have been made out.  Although this ground of appeal refers to a so-called finding, there was no finding made nor verdict given against which the Appellant can appeal.  Accordingly, for the purposes of the appeal this ground was not argued.

Ground 4

27.  This was a catchall submission that the convictions were unsafe and unsatisfactory under all the circumstances.

Appellant’s argument

Ground 1

28.  The argument for the Appellant was that the charge related to the distribution of infringing copies, which had to involve a physical transfer of a tangible object.  Despite changes in the technology of copying, the expression of material form has always been taken to mean a tangible, physical medium.  Whichever medium was used, central to the concept of a copy is that it must be a tangible object.

29.  The Appellant pointed out that the word “distribute” is not defined in the Copyright Ordinance, but section 24 defines “distribution right”, that section having been copied from section 18 of the 1988 UK Copyright Act.  Collectively, sections 24, 31(1)(c) and (d), 118(1)(e) and (f) govern the distribution right.  An infringement of section 24 includes unauthorised distribution of lawful copies, and involves only civil liabilities. 

30.  Where infringing copies are distributed, additional civil liabilities will arise, for example under section 31(1)(c) and (d).  Criminal liabilities will arise also, as under section 118(1)(e) and (f), which refer to commercial distribution and non-commercial distribution respectively.

31.  Article 6 of the World Intellectual Copyright Organisation Treaty 1996 (WIPO) describes the distribution right, and expressly states that copies, in that context, refers “exclusively to fixed copies that can be put into circulation as tangible objects”.  This definition is essentially the same as “copy” under the Copyright Ordinance.

Proof of distribution of copies

32.  The Appellant contended that the ordinary meaning of “distribute” is “to hand or share out to a number of recipients”; the distributor must pass a tangible object to the recipient.  This requires a physical transfer of the object from distributor to recipient.  To prove that a copyright work is distributed, it is necessary to show a physical transfer, of the tangible object embodying the copy, from the distributor to the recipients.  This includes the giving out of papers, delivery of magnetic tapes or handing out of CDs.  If there is no physical transfer, there cannot be a distribution of copies in the copyright sense.  The distribution right does not apply to dissemination of intangible data without the physical transfer of tangible objects.

33.  The Magistrate found that the Appellant’s activity in making full copies of the films and uploading three corresponding .torrent files to a newsgroup server thereby enabling the public to download the films, amounted to distribution.

34.  He, allegedly, had erred by failing to recognise that distribution of copies requires proof of a physical transfer, which did not occur.  During downloading, the copies of the films in the Appellant’s computer stayed on the computer’s hard disk and memory but this hardware, a tangible object, was never transferred to the downloaders.

35.  As the Magistrate could not find any physical transfer of tangible objects from the Appellant to the downloaders so his conclusion was “The downloading involved the dissemination of the data comprising the infringing copies”.  This was not distribution within the meaning of section 118(1)(f).  The Appellant argued that section 118(1)(f) in its current form, was not intended to apply to an act such as the Appellant’s.

36.  Counsel relied on section 26 of the Copyright Ordinance, to support his argument that section 118(1)(f) is not intended to apply to an act such as the Appellant’s.  A discussion of “Internet right” and “distribution right” ensued, its basis being that the adoption of Internet right in section 26, in addition to the distribution right in section 24, showed that it was not the intention of the HK legislature that making a work available on the Internet should amount to distributing copies of that work.

37.  If it were otherwise, counsel argued, there would have been no need to enact section 26, as the act of making a work available on the Internet would have been subsumed within the act of distribution in section 24.  This would offend the basic rule against duplication in statutory interpretation.

38.  Counsel for the Appellant posed the key question as being: “Would the non-commercial distribution offence under section 118(1)(f) also apply to the Appellant’s act of making the three films available on the Internet for non-commercial purposes?”  His answer to that question was “No, that making a work available on the Internet does not amount to distributing copies of the work.”

39.  Counsel submitted that one could reach the same answer based on the copyright legislative developments in the UK and HK.  He compared the history of that development which, he claimed, showed that the non-commercial distribution offence was not intended to include the act of making a work available on the Internet for non-commercial purposes.  If that had been the intention, it would not have been necessary for the UK to create the non-commercial Internet offence specifically for infringement of the Internet right.

Legislative development in HK

40.  Counsel for the Appellant pointed out that in Hong Kong the word “distribute” had been defined in the Prevention of Child Pornography Ordinance, Cap. 31.  That definition includes ‘making any message or data available through any means of electronic transmission.’  Counsel’s argument was that ‘distribute’, as defined, was not regarded by the HK legislature as including the making available of a work on the Internet and thus no such specific definition was added to the Copyright Ordinance.

41.  Counsel’s conclusion was that the Appellant’s acts, appeared to infringe the Internet right of the copyright owners thus incurring civil liability, but did not constitute the non-commercial distribution offence under section 118(1)(f).  Only if the HK legislature introduced a section equivalent to section 107(2A)(b) of the UK Copyright Act 1988, could copyright owners bring criminal proceedings under section 118(1)(f).  Otherwise, the proper remedy was for the copyright owners to bring a civil suit.

Ground 2

42.  This alleged that the Magistrate erred in law by failing to recognise that the copy made in each downloader’s computer was caused by the downloader himself.

43.  The basis of this argument was that although the Appellant’s computer was the seeder computer, the agreed evidence of the prosecution’s expert was that each downloading process was initiated by the downloader personally; it was that decision which directly caused the creation of the copy in his individual computer.

44.  Downloading under the Bit Torrent system is a collective effort, but it was the downloader who was in control during that process.  Nobody else, including the seeder computer, had any control over his decision.  The downloader was the most proximate cause of the making of the copy in his own computer.

45.  Because the downloading is by means of  “packet-switching” technology, the downloader was not doing anything other than gathering packets of information from his peers, including the seeder, thus enabling the copy in his computer to grow and crystallise.  No tangible objects were physically transferred from the seeder, or anybody else, to the downloader – so there could be no distribution of copies.

46.  The Magistrate could not find that the copy in each downloader’s computer was created by the Appellant, rather than the downloader.  At most he could conclude that the Appellant’s act had played a crucial part in facilitating or assisting the downloaders to make copies in their own computers.  Although this may have amounted to the Appellant’s authorising the downloaders to make copies, it did not equate with distribution of copies.

47.  The Appellant used the analogy of a person placing a paper drawing on a photocopier and enabling any passer-by to make a copy by pressing the “Copy” button.  Every copy thus made was made by the passer-by.  The person who placed the drawing there originally may have authorised others to make copies, but his act was not distribution in a copyright sense.

48.  On these two grounds, the final submission was that there were grave doubts as to whether the Appellant’s act, or acts, came within the definition of the offence under section 118(1)(f).  The benefit of those doubts must go to the Appellant.  The Appellant’s conviction despite such doubt was contrary to the basic rule against penalisation under a doubtful law.

49.  It was contended that the charges were misconceived and the convictions should be quashed.

The Respondent’s Arguments

50.  The two issues that arose on appeal in respect of section 118(1)(f) can be simply stated:

(1)     What constituted distribution for the purposes of the Ordinance?

(2)     Did distribution of copies in terms of the Copyright Ordinance refer only to physical material entities

51.  To answer those questions the Respondent had to explain the meaning of “distribution”, and whether copyright works had to be in a tangible or physical form.  As neither the UK Copyright Act nor the Copyright Ordinance defined “distribution”, the Respondent contended that the meaning must be derived from the principles of statutory interpretation as applied in Hong Kong.

52.  Section 19 of the Interpretation and General Clauses Ordinance, Cap. 1 was advanced and relied on by the Respondent as being properly applicable when interpreting the Ordinance.  On the authority of R v Soo Fat Ho [1992] HKCLR 114, section 19 must be given full recognition and effect by the courts.

53.  The Respondent submitted that as a court was entitled, indeed required, under that section to ascertain the true position, it was necessary to read all the relevant provisions together and in the context of the whole statute as ‘a purposive unity in its appropriate legal and social setting’.  Further, it was necessary to identify the interpretative considerations which arose and then, if they conflicted, to weigh and balance them (Medical Council of Hong Kong v Chow Siu Shek [2002] 2 HKLRD 674).

What constitutes distribution?

54.  The Magistrate in interpreting “distribution” had taken into account Section 19 of the Interpretation and General Clauses Ordinance, Cap. 2.  He discerned no ambiguity in Section 118(1)(f), finding it used ordinary language which could be clearly understood.

55.  The court was referred to two decisions where the meaning of distribution was considered.  In the first, Shetland Times Ltd v. Willis (1997) SC 316, one of the two issues before that court was relevant to that consideration.

56.  Briefly the facts were as follows.  The proprietors of a newspaper (the pursuers/plaintiffs) set up a web site expecting that once its information service became known they would be able to sell advertising space on the front page of the site.  Another newspaper (defenders/defendants) operated a web site which reproduced headlines and text from recent issues of the first newspaper’s publication, thus enabling prospective advertisers to bypass the first site.  The first proprietors sought a declaration contending that the second newspaper had infringed copyright.

57.  The argument on copyright is not relevant here, but the defenders argued too that the process of Internet communication did not involve the pursuers sending information.  If it did the sending was done not by the pursuers but by the defenders; it was submitted further that there was no sending (distribution) in the ordinary sense, as the caller obtained the information by its own action.

58.  The court took the view that the pursuers’ contention that the service provided by them did involve the sending of information was prima facie well founded:

“although in a sense the information, it seems, passively awaits access being had to it by callers, that does not, at least prima facie, preclude the notion that the information, on such access being taken, is conveyed to and received by the caller.  If that is so, the process may arguably be said to involve the sending of that information.”

“if the information is being sent, it prima facie is being sent by the pursuers on whose website it has been established. The fact that the information is provided to the caller by his accessing it through the defenders web site does not, in my view result in the defenders being the persons sending the information.”
(per Lord Hamilton @319)

59.  A similar result obtained in a case heard in the United States Court of Appeals – Donna R Hotaling & Others v Church of Jesus Christ of Latter-Day Saints, 118 Federal Reporter, 3^rd series at page 199.  The plaintiffs (Hotaling) copyrighted a quantity of genealogical research materials which were published in microfiche form and marketed.  The Church obtained a legitimate copy of the microfiche, added it to its main library’s collection, listed the work in its index or catalogue system and made the copy available to the borrowing or browsing public.  A year or two later, the Church also made copies of the works and sent them to several of its branch libraries.

60.  The plaintiff claimed this infringed one of their exclusive rights of the copyright, i.e. the right to distribute copies of the copyright work to the public by sale or other transfer of ownership, or by rental, lease, or lending pursuant to 17 USC section 106(3).

61.  The Court of Appeals found in favour of the plaintiff.  Senior Circuit Judge Butzner said:

“When a public library adds a work to its collection, lists the work in its index or catalogue system, and makes the work available to the borrowing or browsing public, it has completed all the steps necessary for distribution to the public.  At that point, members of the public can use the work.” (emphasis supplied)

62.  Although the factual scenario in each of those cases was not identical, the circumstances under which the court accepted distribution had occurred were sufficiently similar to show that this Appellant had done all that was necessary to fulfil the criteria for distribution.

63.  The Magistrate noted that the Copyright Ordinance had not defined ‘distribution’.  The two cases (supra) gave some guidance with the meaning of distribution and he concluded after due consideration that the Appellant by his actions had done all that was required to effect distribution.

64.  After considering the arguments presented by counsel, I am satisfied that the Magistrate was correct in adopting the ordinary meaning of “distribution”.  The absence of a tailored definition is one indicator that that course should be followed.  Another is the ambit and structure of the Copyright Ordinance itself, particularly as shown by the phrasing of various sections, which include reference to digital formats and electronic storage.  The enjoinder that a fair, large and liberal interpretation is to be favoured strengthens the Respondent’s argument that the Magistrate correctly had treated the Appellant as having distributed the films.

The Nature of “Copies”

65.  The Applicant’s argument that only tangible, physical copyright works could be transferred and distributed, had not been advanced at trial.  The Respondent’s answer was that the aims of the Copyright Ordinance were clear and that a fair large and liberal construction showed that copies of copyright works did not have to be physical, tangible objects, but could exist, be stored and be distributed in digital form.

66.  On the facts of Shetland Times, it appears that that court had no difficulty in accepting digital copies as being distributable.

67.  The Respondent submitted that the definition of ‘copy’ was not confined to meaning a ‘physical material entity’.  S.23(2) states:

“(2)   Copying of a work means reproducing the work in any material form.  This includes storing the work in any medium by electronic means.”

That definition comtemplates a copy in digital form and s.198 which defines ‘electronic’, supports the Respondent’s argument that a copy of a copyright work can be stored in digital form in a computer.

68.  The Respondent relied on various sections of the Copyright Ordinance as showing that a copy was not required to be a physical material entity and, further, submitted that the Ordinance, from its inception, had not been confined by its language or structure to physical copies, but was intended to cover digital copies, or copies which were transient, or which were incidental to another use of the copyright work.

69.  The Respondent countered the submission that copy meant a physical form, by drawing attention to various sections of the Copyright Ordinance which showed that storage by electronic means of digital copies was an integral element of the Copyright Ordinance.

[See s. 23(2), s. 198 and s. 23(6) of the Copyright Ordinance]

70.  Certain sections were cited by the Respondent as showing that the legislature intended to safeguard copyrighted works that existed in digital form and to ensure that computer technology was not used, or mis-used, to infringe copyright.

[See s. 2(1)(a), s. 4(a), s. 17(6), s. 23(2) and (6), s. 26(1) and (2), s. 29(1) and (4), s. 32(2) and s. 198]

71.  Section 24, relied on by the Appellant as supporting the submissions that copies had to be tangible entities, defines one of the acts restricted by copyright.  Copyright owners have exclusive rights to issue copyright work to the public, and section 24 defines issuing copies as putting into circulation copies not previously put into circulation, in Hong Kong or elsewhere, by or with the consent of the copyright owner.  The Respondent pointed out that Section 24 could have no relevance to the 3 films the subject of the charges, as they had already been put into circulation in Hong Kong.

72.  The court was reminded that the Hong Kong legislature gave additional protection to copyright owners, over and above its treaty obligations, by providing relief both civil and criminal against those who wish to distribute copyright works other than those in material form.

73.  That the legislature intended this was shown by the speech of the Secretary for Trade and Industry when introducing the legislation and also by the enactment of section 26 of the Copyright Ordinance, a section which had no equivalent in the English legislation.

74.  Section 26(1) refers to the ‘making available of copies of works to the public’ … ‘by wire or wireless means’ and ‘by making available copies of works through the Internet.’  It was only in 2003 that the UK legislature amended the Copyright Act to protect copyright owners who make available copies of copyrighted works by electronic transmissions (ss 107(2A) and 20(2)(b) of the Copyright Act).

75.  The Appellant had contended that if section 24 of the Ordinance covered copyright works not in tangible form, there was no need to enact section 26, to deal with the making available of copyrighted works through the Internet.  The Respondent pointed out that section 24 defines “issuing of works” to the public and section 26 sets out what constitutes “making available” copies of work to the public, so section 26 merely provides one way of putting into circulation copies of the works not previously put into circulation, as referred to in section 24.  Accordingly there is no conflict between the two sections, nor is section 26 rendered otiose.

76.  The Respondent submitted that if the court did not find section 23(2) sufficiently clear, it could take advantage of the relaxation of the rules against use of extraneous materials in statutory interpretation afforded by Pepper v Hart (1993) AC 593, as applied in HKSAR v Yau Mee Kwan (2004) 1 HKC 525 and look at what was said when the legislation was introduced.

77.  On moving the second Reading of the Bill in 1997, the Secretary for Trade & Industry said:

“In devising our own copyright regime, we also have to ensure that the copyright law we put in place can cater for technological advances and suit local circumstances. …

Thirdly, we propose to protect the interests of copyright owners in the digital environment. … We have accordingly included in the Copyright Bill provisions to reflect this consensus, which embodies the guiding principle that the rights of copyright owners must be suitably balanced against the reasonable expectations of all users of the Internet and Hong Kong’s Internet service providers.”

78.  The consensus he referred to was that reached by signatories to the World Intellectual Property Organisation treaty, which in 1996 recommended minimum legislative standards to be provided to protect copyright owners’ rights.  The framework of the Ordinance shows that the Hong Kong legislature intended not just to meet the treaty requirements, but wished to give additional protection to copyright owners by adopting advanced legislation to protect copyright holders.

79.  That would help maintain Hong Kong’s important and hard-won position as a responsible member of the worldwide trading community.  The comments of the Secretary show that the Ordinance was not designed to cope only with the known problems of copyright protection then pertaining, but also to deal with foreshadowed, unknown, or novel future developments, in so far as that was possible.

CONCLUSIONS

80.  The nature and speed of development in communication procedures, techniques and mores demanded the pursuit of different or new solutions and the promulgation of offences which might not necessarily have been envisaged in 1997.  Solutions and any offences devised to combat specific problems would be peculiar to Hong Kong; although comparable problems might arise in parallel in other jurisdictions, methods for solving them may vary.  Legislation, ideally, is drafted to cope effectively with specific problems that exist as well as those that may arise; new problems may or may not be of universal effect and might arise at different times in other jurisdictions.

81.  No real assistance can be derived from a comparison of the historical development of legislation in Hong Kong and the UK, interesting though it might be.  Nor can any weight be given to the Appellant’s insistence that the “distribution right”, a term devised by a textbook author to label a concept, is relevant to Hong Kong; and is the meaning to be given to distribution.

82.  Having considered the matters raised in argument, having regard to the evidence and having noted the structure and content of the Copyright Ordinance, Cap.528, I am satisfied that the Ordinance does, and was intended to cover, copies in digital format.  The Magistrate did not confuse the concept of distribution of data/information with distribution of copies as the Appellant alleges.  Further, the Appellant’s argument that ‘copies’ must involve physical material entities has not been established.  Accordingly the appeal against conviction fails.

Appeal Against Sentence

83.  The Appellant was sentenced to 3 months’ imprisonment on each of the 3 charges on which he was convicted, and an order was made for all sentences to run concurrently.  He appealed against the sentences on the basis that they were excessive and wrong in principle.

PERFECTED GROUNDS OF APPEAL AGAINST SENTENCE

Ground 1

84.  The Magistrate erred in principle by proceeding on the premise that the Appellant’s acts were equivalent to dealing in infringing copies with commercial motives, contrary to his acknowledgment that there is a distinction to be drawn between this case and those cases where money was made out of infringing copies.

Ground 2

85.  The Magistrate failed to explain why sentences imposed in MP3 cases (referred to by the prosecution at trial) should not be followed, as those cases were identical to those charged against the Appellant.  The Magistrate erred in principle by relying on two decisions which involved possession of infringing copies for commercial purposes, an offence very different from those in the present case.

Ground 3

86.  Given that there were considerable mitigatory factors for the Appellant, as acknowledged by the Magistrate and by the Probation Officer; that a recommendation was made by the Probation Officer for community service; and that no serious harm had been caused to the copyright owners, the Magistrate’s adoption of an immediate custodial sentence was, in all the circumstances, manifestly excessive.

MAGISTRATE’S ASSESSMENT OF SENTENCE

87.  The Magistrate gave detailed, considered, Reasons for Sentence.  He started from the basis that Hong Kong carefully and zealously guards intellectual property rights.  The practical application of that principle in dealing with those who criminally infringe copyright is a firm, deterrent-based sentencing policy.  He referred to the case law supporting this policy, in particular Secretary for Justice v. Choi Sai Lok [1999] 4 HKC 334, in which the Court of Appeal approved the comments of the sentencing judge in R v Ng Wai Ching (MA 1309/96) who said, “The victims are the proprietors of the intellectual property whose rights are being violated.  There is international pressure upon Hong Kong to stamp out the traffic in pirated goods.  Failure to attack the illegal activity which is carried out openly and in defiance of the law in certain notorious locations in Hong Kong would be perceived as a default on the part of the government on its international obligations.”  The Court of Appeal (339 C)went on to say: “… we emphasise that custodial sentences of immediate effect should be imposed for offences of this kind unless the circumstances can truly be said to be exceptional.  Indeed, the judge himself said, at the very end of his sentencing remarks:

In conclusion, I wish to give this general warning that anyone connected in any position with this illegal activity will have to show exceptional circumstances to escape with anything less than some form of custodial sentence.  The open flouting of the law in this trade requires sentences, even for first offenders, to act as a deterrent to others.”

In consequence, immediate sentences of imprisonment of 6-12 months duration are generally imposed on offenders who trade in infringing copies, particularly those dealing with or manufacturing CDs or DVDs on a commercial scale.  The exact sentence will depend on the scale and circumstances of the offence and the age and circumstances of the offender.

88.  The Magistrate detailed the activities of the Appellant, emphasising that it was he who had activated the .torrent file and who was the original uploader.  If he had not maintained his Internet connection, others would not have been able to connect through the appropriate tracker server to download the films.  The Magistrate was aware that offences under section 118(1)(f) of the Ordinance had no commercial element and remarked that the legislation made no distinction in gravity between the different offences under section 118; commercial or non-commercial activities each attracted a maximum sentence of four years’ imprisonment.  The Magistrate rightly concluded that that was because the gravity of such an offence was measured by the harm caused to the victim, rather than by any gain made by the offender.  This meant that the absence of a commercial motive was of limited significance in assessing the seriousness of the offence and the appropriate penalty.

89.  The Magistrate specifically noted that the Appellant, and those with whom he associated in the BitTorrent newsgroup, were aware of the possible criminal implications of uploading films to the system.  He acknowledged that there had been no previous criminal prosecutions of BitTorrent offences in Hong Kong and, possibly, none anywhere else in the world.  There was not therefore a body of public knowledge that the misuse of BitTorrent would result in deterrent sentences being imposed as they would be for commercial distribution of infringing copies.

90.  He repeated his comments, made when considering the convictions, that the distinction between the manufacturer or distributor of infringing discs and the BitTorrent system seeder was not very great.  The Internet cannot be shut down and its essence is the free distribution of material.  It can be used for unlawful or criminal purposes; such use is insidious, hard to detect and difficult to control, save by deterrence.  The message had to be sent by courts that distribution of infringing copies, to the prejudice of copyright owners, particularly by seeding films onto the Internet, would not be treated leniently.  The Magistrate dismissed figures for BitTorrent distribution that were produced at trial, because he was not satisfied as to their reliability.

91.  The Magistrate ruled out as possible mitigation that the films were neither current, nor in the “blockbuster” category nothing that a court was not in a position to assess the quality or value of such material.  He took into account that the three films could be purchased in a shop and so the particular aggravation of their being illegal copies was not present.  However, it was not mitigatory either.

92.  The Appellant was treated as a man of clear record.  By the date of trial he was gainfully employed, providing for his family and had been assessed as suitable for community service.  Although the Appellant did not have the mitigation of a guilty plea, it was not an aggravating factor that he fought the case and the court recognised, with approval, his admission at trial of a substantial amount of factual material otherwise difficult, or cumbersome, to prove.  That these were not completed but attempted offences was irrelevant for the purpose of computing sentence.

93.  One complaint of the Appellant (embodied as Ground 3) was that he was not given a Community Service Order although found suitable.  It is significant that a CSO report was not sought by the court of its own volition, but at the behest of the Appellant’s legal representative.  When ordering the report the Magistrate warned the Appellant that he was not obliged to accept the recommendations of the reporting officer and told him that he was considering a custodial sentence.  Despite a favourable report, the court did not consider this case was suitable for a CSO.

94.  The Magistrate found a custodial sentence was imperative.  He considered whether to suspend it, but could not find any exceptional circumstances which would justify his doing so.  That this was the first such conviction under section 118(1)(d) did not amount to an exceptional circumstance.  However, the Magistrate did reduce substantially the term of imprisonment overall, to reflect the novelty of the conviction.  He imposed three months’ imprisonment on each charge and ordered that they run concurrently.  However he warned future offenders that he could not bind any court dealing with them; and they might expect greater terms to be imposed, terms perhaps not very different from those imposed on sellers of infringing discs.

Conclusion

95.  As can be seen from his reasons the Magistrate considered that there was a distinction to be made between this type of case and those where commercial profits were made from the infringing copies.  He was correct in stating that it was the harm to the copyright holder which set the tenor of sentence.  It was for him to decide the extent of any distinction in sentence, taking into account facts relevant to the offences, the personal details of the offender and guidance from relevant case law.  The Appellant has failed to establish that the Magistrate treated the Appellant’s acts as equivalent to dealing in infringing copies with commercial motives.  Ground 1 has not been made out.

96.  Nor has the Appellant succeeded on Ground 2.  The statistics presented to the court on sentencing were kept by the Customs and Excise Department.  They were brief resumés of cases involving infringing of MP3 copyrighted items by improper downloading.  The offences may have been similar in nature, but they were decided on their own facts, by different tribunals and could not be treated as sentencing precedents.  In looking at Secretary for Justice v Choi Sai Lok (supra), R v Ng Wai Ching (supra), relating to possession of infringing copies for commercial purposes the Magistrate was taking into account, not the term of the sentences imposed, but rather the attitude the courts should adopt when dealing with copyright infringements generally.  As for Ground 3 it was entirely a matter for the Magistrate’s discretion whether he accepted the reporting officer’s recommendation.

97.  I am satisfied that the Magistrate had all relevant factors before him when sentencing.  He was aware of guideline cases and heard the submissions of Appellant’s counsel.  There is nothing in the sentences passed which lead me to conclude they are excessive or wrong in principle; the appeal against sentence is dismissed.