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Preamble

We are writing to demand an institutional reform for curbing the ever graver lawsuit abuse arising from copyright protection. We are not going to accuse any specific person or body in the following discussion as it is proven by the police that the prevailing institution of our society fails to give any effective sanction against their activities. Our complaint is focused on the institutional defect of our legal system. We also believe that we are on a solid ground to make such appeal for all the silent victims including those we know well and many other anonymous innocent people working in various industries. In making  unjust legal claim, the copyright protection has emerged to be one of the most convenient  disguise apart from personal injury.

First of all, we must emphasize that we faithfully maintain a balanced and objective view on all the issues or opinions cited for the illustration of the issue regardless the identity of the entities involved in all the discussions as revealed hereafter or in the documents attached herewith if there is any. We are always telling our sincere opinion without any prejudice to the rights and interests of any party  and have tried our very best to ensure the reliability of all the information we are going to provide in this letter.

Secondly, we must also emphasize that we are neither social activists nor political street fighters. We are only small, humble and law-abiding traders intending to make our narrow profit with our knowledge and services. Yet we are also victims of lawsuit abuse arising from the institutional defect of our legal system.

Thirdly, we sent this letter to the designated bodies or branches as listed above because we believe that those persons in charge should be in the adequate position to make a change by working out some sorts of remedies. A copy is also sent to the anchorman of "HK2000", RTHK as a supplement to a  previous letter dated 24/7/2009 to Mr. Robert Chow Yung in response to his positive view over the legalization of champerty and maintenance. We also take this chance to express our gratitude to DAB who pledged their support and assistance to us in establishing a case with the police.

Background

From the very beginning when we started our business in 1986, we believed and have proven that we possess the necessary knowledge and smartness for keeping the common crooks away from us. Nevertheless,  we soon found that we were not well prepared for some extraordinary and professional hawks who were able to breach the law in the name of law. We had never learned from all normal sources of information that the false evidence with the endorsement of a licensed lawyer could be so destructive and hazardous to innocent people in a place ruled by the common law which is always renowned for its prudence in the conviction of an accused person. Moreover, we then understood that there was almost neither preventive measure nor low cost defensive means for the victims to fight against these professional litigants. Despite the allegation was frivolous and practically moonshine, the alleged could not ignore it. Once and again, in the history of our business for more than two decades, we have continuously suffered from nuisances and economic loss arising from frivolous legal claims and endless malicious and illicit probings organized by the bounty hunters in the course of our business no matter how cautious we were. In the most recent case in 2004,  we confronted an ally composing of gigantic corporations, prominent law firms and a definitely deceptive private investigator. With his willfully false affirmation, he triggered two legal claims on us. The issue almost caused us to loose our last and least confidence in the judicial system of Hong Kong and quit all our business forever.

The government is now gathering public opinions on the existing copyright ordinance. To our disappointment, it seemed that the government officials know little about what and how the harm has been done by the stricter copyright protection to all law-abiding practitioners in various industries. In the previous consultation launched in 2007, we tried to illustrate the abuse of copyright ordinance with live cases in our submission to the government (Appendix 1). Yet it appeared that no preventive measure was incorporated in the revised ordinance then. In response to to the recent consultation paper on the copyright protection in the digital environment, we wrote another submission with more emphasis on the queries to the underlying  principles held by the advocates of stricter copyright protection (Appendix 2). It was duly sent to the CEDB but we did not know to what extent our opinion would be considered by the law drafters or law makers.

Dream ally of lawsuit abuse under the prevailing legal system

We suffered not because we intended to conduct or have really conducted any unlawful business but because the wealthy copyright owners, the lawyers and the "private investigators" can theoretically form an invincible dream ally for committing a perfect crime of legal fraud supposing that any one of them is deceptive under the prevailing legal system and the strong plea for stricter copyright protection. Despite the local law forbids champerty and maintenance, still the frivolous litigants can find the loop holes and freely make "legal" claims with the "prima facie evidence" collected by means of malicious and illicit methods such as “pretexting”, “phishing” or “enticement” without the fear of facing any legal sanction.  In some extreme cases,  they simply provide  "perjury". The stricter the copyright protection, the easier for those illicit bounty hunters to abuse those innocent traders.

Defensive mode of operation

Since fighting the latest battle for almost three years against the aforesaid ally but ended up with the failure of police to charge any member of the group of legal blackmail or extortion by means of false accusation through 2004 to 2007, we have absolutely concluded that the lawsuit abuse is an unbeatable lethal weapon capable of destroying an innocent trader and there is no sure means of defense or counterattack at low cost available to the victims under the prevailing legal system.  Based on the direct and reliable information from other furious victims in various trades, we are so sure that the lawsuit abuse has been getting more and more rampant. We also noticed that only the lawyers and their collaborating partners including the informal “brokers” and “private investigators” were the sure winners. To prevent further attack or revenge, we have to  adopt the most defensive mode of operation in the course of our business. We take multiplex (audio-visual) security video recording in our premises and sound recording of suspicious telephone inquires. We also require all our customers to sign against a declaration of copyright and indemnity of relevant liability printed on our invoice upon the placement of order no matter how small the amount is so as to deter the malicious and illicit probing in the form of pretexting or enticement. While considering that electronic recording is still not reliable to combat perjury like swapping our product with counterfeit, we have to cut most of our retailing business; only copyright free products are offered for sale. Simply speaking, we must presume that every inquirer is an malicious and illicit bounty hunter working in collaboration with frivolous lawyers until he proves himself a real customer. Obviously the defensive mode of operation is disastrous to small enterprise like us. To our best knowledge, some desperate victims were sacred and chose to terminate their business. Should we see this the shame of our legal system? Up to this moment, it appears to us that neither the authority nor the professional body has been aware of the existence and damages of lawsuit abuse to law abiding traders.

Causes of lawsuit abuse

In the last twenty years since we were trapped by a bounty hunter by means of pretexting and perjury early in 1987, we have kept exploring the issue and trying to find out how and why the legal system which is always credited by our social elites to be fair and just has kept letting innocent people be hurt and exploited by evil minded persons without sanction in the name of law. We are convinced that the following 3 reasons should account for the problem:

Significant bias in the copyright ordinance

By and large, the biased view of many of our social leaders under the influence of some privileged minority who can be benefited by the biased legal system is the major reason. We also find that lawsuit abuse is not the creative invention of the local frivolous litigants but the imitation of their western predecessors' behavior.  When searching for the relevant information with the keyword "lawsuit abuse" at the time of writing this letter, we have gotten about 1.2 million returns from “Google” , 27.4 million from “Yahoo” and 4.8 million from “Bing”. Much more results can be obtained from the entry of “copyright lawsuit”. Thousands of ridiculous cases are reported and the voices calling for a fundamental law reform to curb lawsuit abuse is getting stronger time after time in the western countries from where our judicial system is copied. We believe that the lawsuit abuse is much more destructive in oriental society because the victims are less willing to publicize their bitter experience or not even know that the illicit probing like “phishing”, “pretexting” or “enticement” itself is unethical in terms of procedure correctness and even a serious criminal activity forbidden by law in accordance with the code of investigation in a civilized society if there is any. They simply lose their confidence in the justice of our judicial system and the governance of our government.

For a very long time, in most of the public hearings, seminars or press release conferences on copyright protection, the discourse was dominated by the opinions of hardliners supporting the strictest protection. Even worse was that only some poorly organized opposing views from users or traders lacking the knowledge, rhetorics and wittiness parallel to those representatives of wealthy copyright owners were cited side by side with the well commissioned presentation of supporting arguments in the same occasion for constituting a false balance of representation of diversified opinions in the debate. Therefore, we observed the following phenomena:

1. The  philosophy of free and sharing culture was smeared as piracy or communism in the cyber world.

2. The adverse effect of the “permission culture” behind the stricter copyright protection on the practitioners of other relevant trades like IT and creative industries was always understated or even denied.

3. The free knowledge in the public domain as the common legacy of human beings has never been protected. Its contribution and importance have never been notably admitted or recognized.

4. The business model of open source freeware and its implication to the development of IT industry was belittled.

5. The significance of the literal work released under free license (eg. GNU General Public License, Creative Commons License, etc.) to the creative industry and the human culture was ignored.

In consequence, the direction of legislation has long been led by the monolithic thinking conform to the wealthy big copyright owners. In spite of the queries from users, consumers, scholars and practitioners in various fields, the government officials still take a firm hold of the view representing the tycoons of big conventional media firms. For instance, the denial of exemption of format shift conversion for legal genuine copy holder is a total negligence of the change of user habit in line with the technological change. When PMP (portable media player) has thoroughly replaced the cassette player and disc player, who else will bring the old media and their bulky players around in traveling? Therefore, under the current copyright ordinance, almost every PMP owner can be assumed to be an offender in the light that optical disc is still the only carrier of the entertainment content. Another example is the illegalization of circumvention which is genuinely a redundant legislation because the production, trading and use of pirated IP products have already been identified as offense under the relevant ordinances. However, the latent threat of circumvention in broad sense  to the practitioners of IT industry is ignored. Not to mention that a hot programming technique called "virtual machine" is by default a circumvention technology, a very simple multimedia recording program may be capable of circumventing the digital right management (DRM) or any kind of use restriction mechanism incorporated in a digital file or its carrier, or even the plain AV input/output sockets can be defined in broad sense as a circumvention hardware device for bypassing the DRM. In this sense, the anti-circumvention ordinance may turn out to be a nightmare to all the technical people.

We do not think that there is only one viable business model for dealing in IP product as advocated by the hardliners of copyright protection. Their arguments are not unquestionable. We summarize our queries to the rationale of those hardliners appealing for stricter copyright protection as follow:

1. Legitimacy of the EULA: Most of the EULA(End User Licensing Agreement)  of IP products is a legal but unfair contract between the vendor and purchaser under the current legal framework due to the power, information and knowledge asymmetry. The  EULA is drafted at the free will of the vendor so that the purchaser is deprived of many of the rights implied in the conventional concept of ownership to which he is  entitled, such as the right to transfer or resell (eg. Restriction to transfer for OEM software or even box software for retail), the right to adapt it for specific environment (eg. forbiddence to format shift conversion), the right to modify it for non-destined purposes (eg. anti-circumvention of use restriction), etc.

2. Presumption of forbiddence: In practical environment, the prerequisite of authorization implies the presumption of forbiddence. In digital environment, the presumption of forbiddence hinder almost all kinds of activities. The situation is even worse because prompt, convenient, reliable and legally supreme "prior art"  data base is absent in reality.

3. Biased view over similarity: Under the influence of lobbyers, the indeterminability of plagiarism or coincidence of similarity is sniffed by the authority. Its effect on the legislation and jurisdiction confound all people working in relevant industries. A creator of a genuine primary artwork may be convicted guilty of plagiarism just because of coincidence of similarity.

4. Harm to competition: The copyright protection has corrupted into a convenient means for wealthy copyright owners to curb competition from trading rivals. Moreover, when copyright dispute involve western people or companies, discrimination against local traders is extremely common.

5. Encouraging Lawsuit abuse: The indeterminability of plagiarism and the ever strengthened copyright protection have given rise to the unethical activities of lawsuit abuse. Except those very talented and knowledgeable professional litigants who target mainly on wealthy big enterprises, all others prey on SMEs. They deliberately make infringement claims for frivolous reasons.

6. Nourishing Legal blackmail or extortion: The loose requirement for the prima facie evidence for making copyright infringement claim, the immense contingent cost of litigation, and the difficulties in meeting the standard of evidence beyond all reasonable doubts for the conviction of the malicious and illicit litigants have fueled lawsuit abuse with more evil power, making it further corrupts into legal blackmail or extortion. Again, in Hong Kong, to our best knowledge,  SMEs are the major target of legal blackmail or extortion.

7. Exaggeration of loss in terms of value: The occasional windfall return to technological progress in production and communication in its early stage is misinterpreted as the intrinsic value of the copyrighted content to be delivered, thus exaggerating the loss of infringement.

8. Exaggeration of loss in terms of quantity: The unauthorized sharing (mainly illegal download) quantity at close to zero cost is misinterpreted as the effective market demand at the listed price, thus exaggerating the loss of infringement.

9. Under-estimation of the enforcement cost: The social cost for enforcing the strict copyright protection, including the adverse effect on both the civic life and commercial activities is always denied and has never been formally assessed. The former has eroded the existing freedom of every citizen and the latter has aggravated the polarization of wealth distribution.

We deem that in many cases copyright protection has corrupted into the abuse of legal right by some privileged minority and a group of misled followers for attaining unjust benefit or enrichment they do not deserve at the sacrifice of the innocent majority. We respect personal will, copyright and private ownership but dispute radical measures and ordinance that harm the daily life and normal business activities of law abiding people. The fall of the general prices level is not a unique phenomenon found only in the sale of intellectual properties in the past two decades while China has been surging as the world factory. The drop of the return to the enterprises and their employees in those industries related to digital technology is just the result of the mega-trend of socio-economic development induced by the digital revolution. Taking design and printing service in which we engage as examples, if no body can tell whom is to be blamed for the more than 90% price cut in the last twenty years, why the hardliners can affirm that they should earn as much as that in those good old days? To further illustrate the effect of technological progress on the price for the publishing of books, we may trace the course of development. The handwritten paper copy was destined to displace bamboo slip and the printing was destined to displace handwriting because the new technology kept pushing down the price. The digital revolution is only repeating the history. Those entertainment vendors fail to make as much profit as before because they intends to charge a low cost CD album as much as a gramophone or phonograph record,  or a downloaded song as much as that on a CD. When legal and free stuffs are available on the internet, this conventional business mode of operation is unrealistic even the strictest copyright protection measure is exercised. Stricter copyright protection measure as proposed is just an attempt to grab the monopoly power by some wealthy copyright owners by means of legislation at the expense of competition and the survival of SMEs under the threat of lawsuit abuse. The legal blackmail or extortion has killed our retail business. For sure, we are not the only victim.  Radical views over the scope and applicability of the proprietary right of intellectual property on both extremes as well as the modest opinion in the middle supporting copyright protection but denying abuse are easily found in western countries. Nevertheless, we must ask why only the arguments representing the interest of the tycoons of wealthy copyright owners are supported by the government officials and most law makers while the opposite views are always ignored or simply denounced as the advocate of piracy. Can the copyright ordinance be qualified to be good law if law abiding people do not know how to comply with it?

The absence of regulation of the activities of private investigators.

As a matter of fact, without the collaboration with illicit private investigators, frivolous lawyers alone may not be able to convince the copyright owner to start the legal proceeding except the owner himself is also a frivolous litigant. The lack of regulation of private investigators as bounty hunters is a main cause for the illegal collection of evidence in the probing.   We could hardly imagine that an "investigator" could propose an offense (i.e. enticement) or provide false authorization (i.e. pretexting) to law-abiding traders for producing the "evidence of copyright infringement" in the "probing". We could hardly believe that a demonstration photograph taken as manipulated upon the request of a deceitful "private investigator" under a false pretense that their own design was in arrears with all the  promise of taking it for fair use was then being framed as a "proof" of illegal trading of those items in the photograph. We burst into extreme anger when some of these bounty hunters simply made willfully false affirmation (i.e. perjury) to trigger a legal claim.

Lack of effective means to curb champerty and maintenance initiated by frivolous lawyers

Even ordinary people know that the legitimacy of the evidences collected or created in the above mentioned ways is questionable. These bounty hunters absolutely do not mind the code of investigation or they are probably ignorant to it. Logically speaking, they are the ultimate crime organizers. Nevertheless,  we were shocked when we learned that the ridiculous story full of unresolved conflicts and inconsistence given by an private investigator who then fled from the investigation conducted by the police for half year was what the so-called solid evidence claimed and accredited by the professional lawyers of some prominent law firms in Hong Kong. We almost lost the last and least confidence in the law profession and the judicial system when we were told that a law professional could still push the victim of frivolous or false allegation to confess and settle the groundless claim off the court room with nothing but only the threat of the huge contingent cost of litigation. In short, we were terrified by their logic and behavior. If these activities are not checked, no innocent trader can be safe. Frankly speaking, we faithfully believe that what they are doing is undermining the justice of the judicial system, driving the general public to take the side of the opposing camp against the establishment and fueling energy to their radical thought. Therefore, in addition to an institutional mechanism like an licensed system for regulating the quality and behavior of private investigators, we appeal to the authority and the relevant professional bodies to perform their due responsibility to assure the integrity and professional conduct of all law professionals. Is there anybody would tell us what can be done if a licensed lawyer plays a key role in lawsuit abuse?  

We are happy to see that the government has finally recognized the adverse effect of  champerty and maintenance and admitted the need for a curb on them after years' denial of the rampancy of there activities. However, except community education in the form of TV advertisement and publication of leaflet, we do not know what kind of material action has been taken to suppress these activities initialized by frivolous lawyers, especially those frivolous claims intended for "off-the-courtroom-settlement". We are aware of the judicial reform in 2009 which encouraged mediation instead of court proceeding. However, we cannot be sure to what extent the victim of false accusation or frivolous claim can be benefited by the mediation in the context of a legal framework biased to wealthy and professional litigants. We are also much puzzled by the extremely technical operation of the "payment into court" system claimed to encourage voluntary settlement and punish tough litigants. On the contrary, we feel that it may penalize those innocent people being ignorant of legal procedure or even a novice of law practitioner. To our best knowledge, once the victim receives a formal claim letter issued by a licensed lawyer, the legal proceeding nominally starts. No matter how frivolous and practically moonshine the allegation is, there are little choices available to him for self-defense at affordable cost according to the prevailing legal procedure before or after the 2009 judicial reform, not to mention the possibility of penalizing the frivolous litigant. Please make it known to the public with proof if we are wrong. All the formal and public informations attribute the rampancy of champerty and maintenance to those people who are not licensed lawyers. However, we query the validity of the thesis. 

Conclusion

Being an extremely small enterprise, we do not have too much resources and knowledge to write a neat and well organized submission to the authority but we sincerely hope that our voice would be heard and considered in the process of legislation and policy making. We would like to end our letter with a passage cited from a commentary on a famous lawsuit against RIM (Research in Motion, the manufacturer of Blackberry) written by Mr. Jim Rapoza, who is a Laboratory Director of an internet magazine:

Why should we strive to be a fanatic follower of such a corrupted and ridiculous system blamed even by their citizens without reservation?

Thank you very much for your attention and consideration in anticipation.

Best Regards

Yours Sincerely,
Uncle Ming's Gallery.

Attachment:
Appendix 1: Opinion on the Review of Copyright Ordinance, 2007
Appendix 2: Opinion on the Amendment to the Copyright Ordinance 2010