HKSAR v. CHAN TAK TIM

CACC 7/2004

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CRIMINAL APPEAL NO. 7 OF 2004

(ON APPEAL FROM DCCC 996 OF 2003)

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J U D G M E N T

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Hon Pang J :

Background

1. After his trial in the District Court before Judge Sweeney, the applicant Chan Tak Tim was convicted of four charges relating to copyright infringement offences. This is his application for leave to appeal against his convictions.

2. Of the four charges, two were for possession for the purpose of, or in the course of, any trade or business of infringing copies of copyright works with a view to committing an act infringing the copyright without the licence of the copyright owner, contrary to section 118(1)(d) and section 119(1) of the Ordinance. The subject matter of these two charges were a total of 9,648 TV game discs.

3. Of the remaining two charges, one was for possession of articles knowing or having reason to believe that they are used or are intended to be used to make infringing copies of copyright works for sale or hire or for use for the purpose of, or in the course of, any trade or business, contrary to section 118(8) and section 119(2) of the Ordinance. The articles involved in this charge are :

(i) four sets of CD duplicators each with one CD-ROM drive and five CD writers, and

(ii) 510 blank discs.

4. The fourth charge was for the making for sale or hire infringing copies of copyright works without the licence of the copyright owner, contrary to section 118(1)(a) and section 119(1) of the Ordinance. The infringing works were 10,045 TV games discs being infringing copies of copyright works. It is the prosecution's case that the discs seized contain pirated computer game software for use in a popular Japanese computer game console.

The facts

5. On 4 September 2002, the applicant together with another defendant were intercepted by officers of the Customs and Excise Department outside a block of flats in the Mong Kok area. A quantity of TV game discs were recovered from a rucksack carried by the applicant. A set of keys were also recovered from the applicant who then led the officers to an upstairs flat where nearly 20,000 TV game discs containing pirated copyright works were found. In the flat the officers also seized CD duplicators, CD writers plus a quantity of blank discs.

6. At the trial the judge admitted into evidence an affirmation by one Ms Yip sworn pursuant to section 121 of the Ordinance. The affirmation seeks to establish that the material recorded on the discs seized were copyright material made without the licence of the copyright owner. The judge accepted and relied on the contents of the affirmation and found the particular element of the respective offences were proved.

The grounds of appeal

7. Mr Percy for the applicant who did not appear in the court below, advanced a total of five grounds of appeal. The first four grounds are based on a complaint that the section 121 affirmation by Ms Yip should not have been admitted into evidence as the affirmation failed to comply with the requirements of section 121(1). Counsel seeks to rely on the following passage in Tse Mui Chun v. HKSAR [2004] HKLRD 351, a decision by the Court of Final Appeal :

"41. We now come to the point that emerged in the course of the hearing of this appeal. It is a technical point but, nonetheless, a point of substance. A s.121 affidavit or affirmation is not admissible in evidence unless it states the matters required to be stated by paras.(a) to (e) of sub-s.(1). Each of these paragraphs must be complied with. If any is not complied with, the affidavit or affirmation is not admissible. ..."

8. The fifth ground is a general ground contending that the convictions were unsafe and unsatisfactory.

Section 121(1)(b)

9. Section 121(1) provides :

"(1) An affidavit which purports to have been made by or on behalf of the owner of a copyright work and which states-

(a) the date and place that the work was made or first published;

(b) the name, domicile, residence or right of abode of the author of the work;

(c) the name of the owner of the work;

(d) that copyright subsists in the work; and

(e) that a copy of the work exhibited to the affidavit is a true copy of the work,

shall, subject to the conditions contained in subsection (4), be admitted without further proof in any proceedings under this Ordinance."

10. The argument advanced by Mr Percy was this : section 121(1)(b) requires "the name, domicile, residence or right of abode of the author of the work" to be stated. The authors of the computer programmes referred to in paragraphs 11, 13, 15 and 19 of the affirmation were however, corporations. The wordings of paragraph (1)(b), it is said, contemplates a person rather than a corporate author. That being the case, proof of copyright subsistence and ownership is not available by means of a section 121 affirmation in the cases where the author of the computer programme is a corporation. In my view, to suggest the term "author" is only confined to a live person would only serve to defeat the purpose of the legislation. It could not have been the intention of the legislature that the word "author" appearing in section 121(1)(b) could have a meaning restricted to that of a live person only. It must admit an interpretation including that of a corporate body.

11. It was further submitted by Mr Percy that the affirmation is defective in that paragraph 10 of the affirmation states the domicile and residence of an author of one of the programmes is in the USA. The USA cannot be an individual's place of domicile as the term "USA" is nebulous. The domicile of an individual could only be in a particular state. The paragraph reads :

"The author of the above video game computer software ... is Hironobu Sakaguchi. The domicile and residence of Hironobu Sakaguchi is USA."

12. In the case of corporate authors identified in paragraphs 11, 13, 15 and 19 of the affirmation, their domicile and residence are described as in Japan. By this I take it to mean that the respective corporations were incorporated under the laws of Japan and although they may be international corporations having branches in a number of foreign countries, their business is principally conducted from Japan where their head offices are located. In my opinion the information stated in the above paragraphs clearly shows where the corporate bodies are located and is therefore in compliance with the requirements under the section.

13. Hironobu Sakaguchi, it seems, is a person. This subsection provides for information as to the authorized right of abode as an alternative to the place of residence and so Mr Sakaguchi has right of abode in the USA. I fail to see any reason why provision of information of one's right of abode can be criticized in any way as failure to comply with the requirement of this section.

14. Having said that, one must look at the wider question associated with the alleged non-compliance with the requirements under section 121. Assuming for one moment that a particular paragraph does in fact fail to provide the information as required under this section for one author, does it render the entire affirmation inadmissible as evidence? The better view must be that it only affects that part of the affirmation with which the court finds non-compliance. The non-infringing part remains admissible nevertheless.

15. In his fourth ground of appeal, Mr Percy complains that the judge was wrong to reject the defence submission on a point of law that where sections 121(1)(e) and (15) required the "true copy of the work" it could only be produced in the form of the object code in the case of a computer programme. By virtue of section 4(1) of the Ordinance, a computer programme is treated as a "literary work". Section 121(1)(e) requires that the affirmation should state :

"that a copy of the work exhibited to the affidavit is a true copy of the work".

This must be read in conjunction with subsection (15) of the same section which reads :

"For the purpose of subsection (1)(e), where the work is a computer program, whether in source codes or object codes, a copy of the program only in the form of object codes is also regarded as a true copy of the program."

Counsel in the court below argued that to comply with this section, the affidavit must produce with it the object codes. Failure to produce the object code, it was submitted, would render the affirmation defective and hence inadmissible.

16. Paragraph 24 of the affirmation states in the clearest possible terms :

"Exhibited to this Affirmation marked 'D' to 'Q' are true copies of the video game computer software in which copyright subsists."

What is being exhibited in this case are the marketable form of the computer programmes which, in my view, could only have been produced by going through the stages of transferring the computer programme into source codes and then to object codes. It flies in the face of common sense to suggest that the affirmation must contain the object codes when the entire computer game programme has been placed before the court as exhibits. In my view section 15 of the Ordinance only provides for an alternative means of exhibiting a true copy of the work by exhibiting the object codes.

17. In the unlikely event that it is argued that the TV computer game discs seized contain the result of research and development undertaken by independent researchers not in anyway associated with the present authors or copyright owners, one would only need to look at the evidence relating to the arrest of the applicant and the seizure of the infringing items. Why else would one need duplicating equipment and packaging material bearing an exact resemblance to the Japanese corporations whose ownership of the copyright had not been subject to challenge at the trial? The inescapable conclusion would be that the discs seized contain pirated copyright works of those owners.

18. In the fifth and last ground, it was argued that in all the circumstances the conviction of the applicant in respect of each of the offences was unsafe and unsatisfactory. The evidence against the applicant as contained in the admitted facts is no less than overwhelming. The convictions in respect of the offences are neither unsafe nor unsatisfactory.

19. For the reasons given above, the application for leave to appeal should be dismissed.

Hon Cheung JA :

20. I also agree that the application should be dismissed. I would like to make the following observation of my own.

The charges

21. The applicant was convicted of four charges relating to copyright infringement.

22. These charges were as follows :

(1) Two charges of possession for the purpose of any trade or business of infringing copies of copyright works with a view to committing an act infringing the copyright without the licence of the copyright owner (Charges 2 and 3), contrary to section 118(1)(d) and section 119(1) of the Copyright Ordinance ("the Ordinance");

(2) One charge of making for sale or hire infringing copies of copyright work without the licence of the copyright owner contrary to section 118(1)(a) and section 119(1) of the Ordinance (Charge 5);

(3) One charge of possession of articles knowing or having reason to believe that they are used or are intended to be used to making infringing copies of copyright works for sale or hire etc. contrary to section 118(8) and section 119(2) of the Ordinance.

The facts

23. The facts are straightforward. The applicant together with another defendant who was also convicted were intercepted by officers of the Customs and Excise Department outside a building. They carried rucksacks and video game discs were found inside their rucksacks.

24. The applicant had the key to a flat in the building. Inside the flat were large quantity of optical discs, five sets of discs replicating machines, blank discs, large quantity of transparent plastic bags and inlay cards and also a dozen carton boxes.

25. A large quantity of the discs found in the applicant's rucksack and in the flat were infringing copies of copyright works, namely, TV game discs.

26. A representative of the copyright owners ("the representative") made an affirmation and gave oral evidence that copyright subsisted in the computer programs and softwares of the video games and the discs seized were infringing copies of the copyright work.

Nature of infringement

27. The particulars of Charges 2, 3 and 5 specified that the copyright that had been infringed were literary works. The literary works that were said to be infringed were computer programs and 'computer software'.

Subsistence of copyright

28. For Charges 2, 3 and 5 it was essential for the prosecution to prove the subsistence of copyright in the computer programs which the applicant was alleged to have infringed. This will likewise apply to Charge 4 because unless copyright was proved as a primary fact it cannot be said that on the evidence the applicant possessed articles which were used or intended to be used to making infringing copies.

The Copyright Ordinance

29. Section 2(1) of the Ordinance provides that copyright is a property right which subsists in, among other things, literary work. Under section 4(1) literary works includes :

(a) a compilation of data or other material, in any form, which by reason of the selection or arrangement of its contents constitutes an intellectual creation, including but not limiting to a table;

(b) a computer program; and

(c) preparatory design material for a computer program.

There is no definition of computer program in the Ordinance.

Copyright in computer program

30. In this case although the representative referred to 'computer programs' and 'computer software' as the subject matter of copyright, no issue was taken at the trial and on the appeal as to the meaning of 'computer software'. The case proceeded on the basis of infringement of 'computer programs'.

31. Without the benefit of assistance from counsel and based on my own research, this is how I understand the position on computer program copyright.

Technical principles

(1) A computer program is a set of instructions to a computer in a form acceptable to it.

(2) The designer of the program or programmer will first design the program. This is written in ordinary language with formula and flow charts and diagrams representing the procedure.

(3) Having achieved a design of the program, the designer or programmer has to code it i.e. translating the program into a language the computer understands. This requires two steps.

(4) In the first step the programmer writes in a source code in one of the recognized computer languages. This consists of a mixture of words of English and a system of algebraic instructions. These languages are known by names such as COBOL, D1BOL and DBL. These languages are known as 'high level language' because the source code is not far removed from ordinary language. This is called the 'source program'. The source program cannot be read by computer.

(5) In the second step, after the source code is written, it is processed by a program called a compiler into binary code. All the words and algebraic symbols become binary numbers, such as 0's and 1's. Computers only work in binary works.

(6) A binary program code is called an 'object code' or 'machine code'. The program in object code in the first instance consists of a sequence of electrical impulses which are often stored on a magnetic disc or tape, and which may be stored permanently in a ROM ('read only memory') a silicon chip which contains thousands of connected electrical circuits.

(7) The object code is embodied in these devices in such a way that when these devices are installed in the computer and electrical power is applied, there is generated the sequence of electrical impulse which causes the computer to take action according to the program.

(8) It is possible to display the description of the electrical impulses on the visual display unit of the computer, and to print it out on paper.

(9) See Computer Edge Property Ltd v. Apple Computer Inc. (1986) 161 CLR 171 ("The Apple case"), Total Information Processing Systems Ltd v. Daman Ltd [1992] FSR 171 and Ibcos Computers Ltd and another v. Barclays Mercantile Highland Finance Ltd and others [1994] FSR 275.

Position in Australia

32. In the Apple case the High Court of Australia considered whether source code and object code constitute literary work protected by copyright.

The decision

33. A summary of the decision is found in Lahore on Copyright and Design Vol. 1, Para.50,030 to 50,040.

(1) Gibbs CJ and Brennan J held :

(a) The programs in source code were original literary works.

(b) The programs in object code were not literary works.

(c) The programs in object code were not translations and therefore not adaptations of the source code programs.

(2) Deane J held that the defendant's ROMs, and equally the plaintiff's ROMs, were not reproductions or adaptations of an actual literary work constituted by the written expression of the programs in source or object code. He therefore found it unnecessary to determine whether the written expression of the programs in source or object code were literary works. However, he did hold that the object code programs 'embodied' in ROMs were not literary works.

(3) Mason and Wilson JJ (dissenting) held :

(a) The source programs were original literary works.

(b) The programs in object code were adaptations of the source programs.

(c) The programs in object code were literary works.

(d) The object programs in the defendant's ROMs were reproductions in a material form of the Apple object code programs.

The reasons

34. The reason why the court held source codes were original literary work was because they were in writing in an assembly code; they conveyed meaning or instructions or useful information and satisfied the test in Exxon Corp v. Exxon Insurance Consultants International Ltd [1982] Ch.119.

35. The majority held that object codes were not ordinary literary work because electrical impulses in a silicon chip cannot be perceived by the senses and are not intended to convey any message to a human being. 'A form from which the words, letters or figures of a literary work cannot be perceived by sight or touch (or possibly, hearing) is not a material form to which the work has been reduced'; the electrical charges which constituted the program could not be 'seen or touched or heard'. 'The re-arrangement of electrons in a programmed ROM is not visible to the human eye'; it was not 'designed or produced to be read or seen'; it was not 'written'.

36. It was relevant, in the opinion of Deane J, that the programmed ROM might be used as a switching device to produce a print-out or visual display of something which could properly be called a literary work.

37. The electrical impulses 'do not represent words, letters, figures or symbols as a literary work'. They do not communicate the letters or figures by which an object program may be represented. The arrangement of electrons '... is not in a comprehensible language'. The arrangement of electrons or electrical charges in the silicon chip was designed and produced to be an attribute of a functioning part of an operating machine.

38. The minority held that it was incorrect to describe an object program as merely a sequence of electrical impulses within a computer. The impulses served to identify a set of instructions in machine readable language designed to guide the machine in its basic operations. They did not form a part of the computer itself. They could equally well be contained in a magnetic disc or tape. The same result could be achieved by the manual operation of a computer in accordance with instructions in a manual but this would be wholly impracticable.

39. The majority saw no reason to doubt that a literary work was made when it was first recorded on tape. In their opinion the Copyright Act did not require that a literary work should be in a written form.

Amendment to the Australian law

40. The Apple case was concerned with the copyright law before it was changed on 15 June 1984 by the Copyright Amendment Act 1984. An amendment was made to the definition of 'literary work' which includes :

(a) a table, or compilation, expressed in words, figures or symbols (whether or not in a visible form); and

(b) a computer program or compilation of computer programs.

41. A definition of computer program was also given by the amendment ('the first definition'). The term meant 'an expression, in any language, code or notation, of a set of instructions (whether with or without related information) intended, either directly or after either or both of the following :

(a) conversion to another language, code or notation;

(b) reproduction in a different material form; to cause a device having digital information processing capabilities to perform a particular function'.

42. This definition has further been amended. The latest definition of 'computer program' means 'a set of statements or instructions to be used directly or indirectly in a computer in order to bring about a certain result.' See Lahore para.51.200.

Subsequent decision

43. The High Court of Australia considered the issue of computer program infringement again in Autodesk Inc. v. Dyason (No.1) (1992) 173 CLR 330. It took a fundamentally different approach to that taken by the court in the Apple case on the basis of the changes made by the 1984 Act. Mason CJ, Brennan and Deane JJ rejected any narrow literal construction of the definition of 'computer program' (i.e. the first which would restrict copyright to a particular existing 'expression' or description of the relevant 'set of instructions' in some 'language, code or notation'). This construction would frustrate 'the obvious legislative intent to confer real protection upon the actual set of instructions regardless of whether they be actually expressed in written form or merely embedded or stored in a non-sensate form such as electrical impulses on a disk, ROM or EPROM (Erasable Programmable Read Only Memory) '.

44. They considered that, when read in its context in the Act, the definition of computer program should be understood as conferring protection upon the stored set of instructions itself, in a non-sensate form such as electrical impulses, on the basis that 'copyright actually subsists in any expression or description of it which can theoretically be made in language, code or notation'.

English position

45. The English Copyright, Designs and Patents Act 1988 (section 3(1)) defines literary work as including :

(a) a table or compilation other than a database,

(b) a computer program,

(c) preparatory design material for a computer program, and

(d) a database.

There is no separate definition of computer program.

46. See Copinger & Skone Jones on Copyright 14th Ed. Vol. 2, Pg.22.

47. In Ibcos., it was held that copyright can subsist in the source code of a computer program, disapproving the contrary statement in Total Information Processing Systems Ltd. In Saphena Computing Ltd v. Allied Collection Agencies Ltd [1995] FSR 616 while source code and object code were discussion there was no analysis whether object code is literary work. It was assumed that copyright subsists separately in these codes.

The debate continues

48. In my view, unless there is a statutory definition of computer program along the lines of the Australian model, the inclusion of computer program as literary work does not end the debate on whether 'object codes' are literary work.

49. The majority decision of Apple has explained why 'object codes' cannot be literary work. A decision of the High Court of Australia (even by a majority decision) is of great persuasive authority and should be given recognition. This case highlights the difficulties of fitting a modern technology like computer program into the traditional framework of literary copyright work.

Section 121 affidavit

50. Section 121(1) of the Ordinance provides a special means of proof of copyright subsistence and ownership by enabling an affidavit on such matters to be given as evidence. But as the Court of Final Appeal stated in Tse Mui Chun v. HKSAR [2004] 1 HKLRD 351 if a statutory shortcut to the proof of essential matters is to be taken advantage of, it is essential that the conditions of the statutory shortcut be strictly observed.

The conditions

51. Two of the conditions required are : First, the deponent of the affidavit has to state copyright subsists in the work (section 121(1)(d)). Second, he has to exhibit a copy of the copyright work and state that the copy so exhibited is a true copy of the work (section 121(1)(e)). Section 121(5) provides that for the purpose of the latter, where the work is a computer program, whether in source codes or object codes, a copy of the program only in the form of object codes is also regarded as a true copy of the program.

Statement of copyright subsistence

52. In this case, the representative had stated on oath that copyright subsists in the computer program. This statement is supported by the Notice of Subsistence and Copyright of the relevant programs published by the owners in the HKSAR Government Gazette. There is no other evidence to contradict this statement.

53. The assertion that copyright subsists in the programs must be a reference to both the source code and object code of these programs. The source codes of these programs were not produced. However, in the absence of contrary evidence which may challenge the statement of subsistence of copyright, the non-production of the source codes will not affect the validity of this statement in respect of source codes. Even if the Australian test on copyright on object codes is applied, the statement that copyright subsists in the source codes is still a valid statement.

Exhibiting the work

54. It then brings to the question of exhibiting the work under section 121(15). Mr Zervos SC, counsel for the respondent, was right when he said section 121(15) was an enabling section. Its purpose is to enable a copy of the object codes to be produced as evidence of the literary work contained in the computer program.

55. It has to be recognized that this subsection does not confer copyright on the object codes. It merely enables the object codes so produced to be used as evidence of the literary work.

56. By way of production the representative exhibited the discs of the computer programs. An argument was raised at the hearing as to whether this satisfies the requirement of section 121(15).

57. As discussed earlier under the part on Technical Principles, the object codes are embedded in the devices such as discs, tapes or ROMs. One would have thought that this has to be the case because the object codes provide the basis for the program to operate. Without the existence of the object codes, the discs, tapes or ROMs will not serve any function.

58. The representative conceded in cross-examination that she did not know the terms such as source codes and object codes and she did not know if the discs she produced contain either source codes or object codes. However, this will not cast doubt on the compliance of section 121(15). It was accepted by the defence that the discs she produced in which programs were contained were genuine products. This being the case there is no room to doubt that copies of object codes of the computer programs were produced in compliance with section 121(15).

Corporate authors

59. A challenge was further made on the compliance of section 121 in respect of authors. Some of the authors of copyright in this case are corporate authors. The Court of Final Appeal in Tse Mui Chun had assumed without deciding that it is possible for section 121(1)(b) to be liberally construed and applied to a case where the author of the copyright work is a company. Unlike Tse Mui Chun, in this case the companies involved are Japanese companies. The problem dismissed in Tse Mui Chun as to whether the companies were incorporated under the law of USA separately or under the laws of the individual states of the USA simply does not arise here. The description that these Japanese companies are residing in Japan complies with the strict requirement of section 121.

Conclusion

60. This is not a case about the subsistence of copyright in object codes. This issue simply does not arise. This case is on the narrow issue of compliance of section 121(1). This had been established by the prosecution. Once this matter was resolved, the subsistence of copyright cannot be in doubt.

61. As the application for leave to appeal on conviction centres on this mater only, its resolution will inevitably mean that the application has to be dismissed.

62. In my view the absence of a statutory definition of computer program is a potential pitfall in copyright enforcement in this area. If Hong Kong is to keep its competitive edge as a world class city, I would urge immediate steps be taken to introduce amendments to the Ordinance along the Australian model.

Stuart-Moore VP :

63. I agree with the reasons provided by Pang J for dismissing this application. It is our unanimous decision that leave to appeal against conviction should be refused. Accordingly, the application is dismissed.

64. I should add that the first ground of appeal advanced by Mr Percy was said to relate to all the charges on which the applicant was convicted. In this ground, it was alleged that all the convictions were unsafe or unsatisfactory "because the prosecution relied upon the affirmation evidence .... made for and on behalf of six owners of various copyright works, which did not strictly comply with section 121(1) of the Copyright Ordinance, Cap. 528, and should not have been admitted in evidence". Leaving our rejection of this argument to one side, this ground could not in any event have extended to charge 4, which alleged that the applicant possessed articles knowing or having reason to believe that they were used or intended for use "to make infringing copies of copyright works for sale or hire ....", contrary to sections 118(8) and 119(2) of the Copyright Ordinance. The prosecution had no need to rely on the affirmation in order to prove charge 4. This conviction, as Mr Zervos, SC, observed, was based entirely upon powerful circumstantial evidence which included the applicant's possession of the keys to the premises where the articles were found and his admission that he was aware that they were there. It follows from this that, as the sentences on all the charges were ordered to run concurrently, whatever the outcome of this application on the remaining charges, nothing would have affected the length of the term of imprisonment being served by the applicant. In totality, the applicant's sentence was twenty-seven months. This happens also to have been the sentence imposed on the fourth charge.

65. In court, the application for leave to appeal against sentence was not pursued and we can now formally indicate that this application is also dismissed.