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I have always been among those who believed that the greatest freedom of speech was the greatest safety, because if a man is a fool the best thing to do is to encourage him to advertise the fact by speaking. (我以為讓愚蠢的人自暴其醜, 正是最大之言論自由所以是最安全的主因)


非官方發佈資料 Unofficial Release

Opinion on the Review of Copyright Ordinance
- ref: /doc/gov/07/on-copyright_070330 -

- Editorial Team

1. Preamble and Background:

Being an SME and a member of creative industry for twenty years, we hope that the following opinion would serve as a reference for the government to know more about our concern with the overall IP policy. SMEs account for more than ninety percent business establishment and employ half of the working population but receive little social and political support. We admit that the government adopt positive SME policy and has provided a lot of supporting service to SME. However, in the process of legislation or making the macro-economic policy, our views and interest were not properly represented. A total skew in favour of large corporates was once and again manifested in various areas such as IP protection policy and review of copyright ordinance. As a rational member of SME, we just demand for a balance policy and legal framework leading to fair competition.

In the past two decades, we had thought that if we acted in good faith and took all necessary measures to ensure our activities complying with the law, including the copyright ordinance, we would have been free from  the troubles. However, even though we foresaw the inherited flaw of the 2001 revised copyright ordinance, revised our trading procedure, gave up some 'sensitive and dangerous' business services such as photo copy and trading of brandname products of which counterfeits overflowed the market for the purpose of avoiding unnecessary dispute over copyright issue, we could not free us from the legal claims triggered by the false evidence provided by an evil-minded reward hunter preying on victims of SME. We provided convincing evidences proving this man's fraudulent behaviour to the police and demand for investigation but finally we found that it was extremely difficult for an unprepared victims to provide sufficient evidence meeting the standard of proof for criminal charges (Refer to Appendix 1 for details). Under the prevailing legal framework, there is no statutory means to regulate the behaviour of these reward hunters. They are able to trap their prey with all malicious and illicit approaches like phishing, pretexting, enticement or else that are criminal in most western countries without the fear of facing criminal prosecution yet the collaboration of these notorious people with law professionals and the executive of rich copyright or patent owners may deliberately abuse the civil claim to blackmail their prey with a high sounding ethical reason. According to the information from other traders, our issue was not an isolated and independent case.

2. Underlying Principles and Practical Issues:

The deficiency of the current copyright ordinance and IP policy is not limited to this. We honestly felt that the legislation process was overshadowed by the influence of lobbiers representing large corporates and their cartels. We do not know how much the views of the general public and SMEs will be taken into consideration but our bitter experience told us that we should not remain silent. In those 'advanced countries', not just a single voice is heard. In the 'Gowers Review of Intellectual Property' ( by Andrew Gowers for the UK government, the author admitted the importance of balanced and flexible rights and assured that recommendations would be made to ensure the instruments of the IP system (patent, copyrights, trade marks and designs) were 'balanced, coherent and flexible' (Gowers Review of Intellectual Property, The executive summary, p5), It would be much appreciated if the same principle is well incorporated in the legislation process of the copyright ordinance. Practically, we hope the government take steps to seek a reasonable balance in dealing with the following issues:

2.1 The private interest vs public interest:

Apparently, this issue was properly dealt with in the legislation process. However, at least two issues were not paid proper attention.

At first, the IP in the public domain was not properly protected against intended privatization by people who claim proprietary right to the common human legacy. Nobody, including the government official, can have a perfect knowledge in the cultural heritage we inherited There should be an overriding clause in law providing the general public the right to void the patent or copyright at any time once sufficient evidence is found for proving that the IP in question belongs to the public domain (i.e. prior art). The following is a typical example:

US patent no. 5900240 was granted to a company on the anti-diabetic properties of 'karela', 'jamun', and brinjal, of which the use is common knowledge and everyday practice in India. In response to the approval of the patent, an angry Indian, Vandana Shiva wrote:

' If a patent system which is supposed to reward inventiveness and creativity systematically rewards piracy, if a patent system fails to honestly apply criteria of novelty and non-obviousness in the granting of patents related to indigenous knowledge then the system is flawed, and it needs to be changed. It cannot be the basis of granting patents or establishing exclusive marketing rights.

The problem of biopiracy is a result of Western style IPR (intellectual property rights) systems, not the absence of such IPR systems in India. Therefore, the implementation of TRIPs, which is based on the U.S. style patent regimes, should be immediately stopped and its review started. ' (

In addition, the attempt of any kind to extend the effective period of patent or term of copyright also infringe the interest of general public. The following is a citation from WikIPedia about the the 'Sonny Bono Copyright Term Extension Act” of USA:

'The Copyright Term Extension Act of 1998—alternatively known as the Sonny Bono Copyright Term Extension Act or pejoratively as the Mickey Mouse Protection Act—extended copyright terms in the United States by 20 years. Before the act (under the Copyright Act of 1976), copyright would last for the life of the author plus 50 years, or 75 years for a work of corporate authors' IP; the act extended these terms to life of the author plus 70 years and 95 years respectively. The act also affected copyright terms for copyrighted works published prior to January 1, 1978, increasing their term of protection by 20 years as well. This effectively 'froze' the advancement date of the public domain in the United States for works covered by the older fixed term copyright rules.... .'(

Similar bills were also initiated in EU and UK under the lobbying activities of large corporates regardless of the strong opposition from the public. They manifested how the public interest could be infringed under the influence of lobbiers who act on behalf of gigantic corporates.

Secondly, the unfair terms and conditions in the licensing agreements, especially those of computer software or the DRM for multimedia entertainment recordings also infringe the benefits of the general public in the sense that they deprive purchasers of a lot of basic consumer rights such as form shift copy as a fair use of copyrighted material. Not all people bother to dig into the details of the Eula. Therefore, many people do not know that it is illegal if they share the printer with more than five users,  or the license of their genuine oem software will void after they have upgraded or repaired their computer.  If not regulated by law, the extensive use of unfair Eula will have the effect of legitimating unfair exploitation of consumers.

2.2 The primary copyright owner (i.e. the creator) vs the secondary copyright owner (e.g. the content provider):

Most people, including the government officials and legislators seem to assume that the copyright owner is also the creator. Actually this is not the fact. In many cases, the primary creator 'assigns' his work at miserable price to wealthy content provider under free market system and all IP protection measures do not protect the interest of ultimate IP creator. Cynically, a lot of economic research found that the incentive to create was inversely related to the extensiveness of the patent system in the light that over protection tends to preclude  rather than encouraging competition. (Fritz Machlups: Research on the MacroEconomic Effects of Patents,  report to the US congress of 1958)

2.3 The primary copyright owner and the developer:

For the same reason as stated in section 2.2, over protection of newly invented technology like an unreasonable long term of patent might not be a positive factor for its further development. However, the determination of a proper term of patent for different technologies is extremely professional. The government must seek outside resources to make the right decision. Again, the independence and objectivity is inevitable for arriving at a fair judgment.

2.4 The rent seeker or free rider vs IP owner:

The concept of rent which originates from economic studies is not easy to be understood by ordinary people. The most common rent seekers are those people or corporates who possess monopoly power in the market. If the legal framework is in their favour, they are able to set the price or dissegregate the market for capturing the economic rent at the sacrifice of consumer. Discriminatory prices in different markets are common for entertainment products like music CD or movie DVD. Consumers in western countries have started to queried if the market segregation is justified.  However, rent seeking behaviour does not confine to the  IP owner. Some people or organizations, for instance, the guild of software industry, statutory body of recording industry, copyright lawyer, private investigator are all the parties benefited from IP protection system. Statutory bodies representing the recording industry are empowered by IP protection law to charge the user license fee. Lawyers are the legitimate representative for either party in copyright dispute. Private investigators as reward hunters prey on service charge or bonus for conducting the investigation. However, if these people corrupt and abuse their power,  to what extent will the adversed effect be caused to the society as a whole? The following observations and live experience may serve as reference.

i. Though we do not have resource to conduct a scientific survey to obtain reliable data about the effect of license fee charged by the statutory bodies of the recording industry on the retailing shops playing music in their premises, our unofficial observation tells us that most of the shops, at least those in our neighbourhood, refuse to pay some four thousand dollars per year and simply stop buying and playing music recording in response to this double charge system. Generally speaking, perhaps not all of them, but at least most of them, including us, were buyers of genuine product. This license fee amounts to about ten thousand dollars for shops locating in down town area. Their rent seeking behaviour has driven this group of quality buyers away from the market which in turn results in the loss of artists and publishers.  Working out a fairer charging system such as a reasonable premium charges per CD purchased for commercial purpose might restore the market demand. In western countries, some independent artists begin to realize the adverse effect of the system and start to waive the charges or even let their work be freely download for gaining more popularity while earning their living from live show or selling CD album. They strive to work out another business model along with the technology advancement.

ii. Under the current patent registration system, just a few vague ideas is enough to convince the authority to approve the registration of patent without the need to put real effort in the development of the hypothetical product or technology. When similar product or technology appears in the market, these 'patent hijackers' may claim the manufacturer for compensation. The famous producer of  PDA phone 'Blackberry' was a victim of the defective patent system.

iii. As we mentioned in previous section, in the absence of an effective surveillance system to ensure the integrity of the behaviour of reward hunters (who claim themselves private investigators), their collaboration with law professionals and executives of IP holding corporates will form a highly dangerous evil force. The violation of the investigation protocol is not uncommon in western countries like US or EU where even malpractice is a criminal offense. For what reasons can we rely on the self-discipline of the reward hunters in the context of Hong Kong? We never know the actual number of false allegations because only a small portion of the victims are willing to publicize their cases. Some victims do not even know the method of probing used by the 'investigator' is criminal. We also cannot be sure what the role of law professional plays in these abuse of IP protection law but the alternate stupidity before the reward hunter and swiftness before the alleged was horrifying.

2.5 The wealthy large corporate vs SME:

It is simple enough to know that wealthy large corporates have all the comparative advantages over SME in copyright dispute. Lacking sufficient financial resources, small enterprises cannot afford to play the costly legal game with large corporates. For many times,  we found that our work was pirated, We did not bother to take legal action because the compensation might not be able to cover the cost. On the contrary, wealthy corporates may bully small enterprises deliberately without a tight budget. They do not even have to go to the court room because the immense legal cost is enough to scare their misery rival to accept their unreasonable terms. They do not even have to pay a penny but their permission because a lot of reward hunters and their co-working lawyers volunteer to conduct investigation for them.

2.6 The business model preservation vs IP protection:

A lot of people advocating IP protection are actually intending to protect a certain business model. It is misleading to say that reproduction or distribution of a certain IP free of charge is a violation of private property right. A lot of famous software such as unix or linux are released under GPL (general public license) or its variants. Their authors are supporters of open source movement and willing to let their work be reproduced and distributed free of charge. These freewares have formed the backbone of the current Internet networking system. The rapid development of WikIPedia is another prominant example to show the power and contribution of 'free' IP. New business models have been developed to cope with the new ecosystem by a lot of enterprises including some very old prominant IT firm in the industry. Once upon a time, a lot of enterprises made a huge profit by selling full function software or CD album in box at extremely high profit margin. They refuse to accept that consumers decline to pay so much for what they receive on account of a complex of reasons but attribute the plunge of sale to copyright infringement based on the unrealistic estimation of loss made by lawsuit agitators who intentionally confuses the zero price demand (i.e. the illegal download) with the effective demand at nominal market price. We do not recognize or admit illegal download of any IP, but have to point out the fact that the extinction of IP pirate might not help too much to boost sale of the IP product in question if their prices remain high. People who were captured, prosecuted and convicted were either unemployed or students from poor families. They absolutely do not have adequate budget to consume these luxury genuine product.


In most of the case, the IP protection issue is over simplified as the war between the IP right owner and IP pirate without any awareness of the special features of IP. Unlike physical property which existence, possession, assignment, transformation and destruction can be clearly defined, traced and monitored, IP may only involve virtual idea which is not easy to be clearly defined in terms of legal jargon. Otherwise, why do those corporates which advocate IP protection in high profile appear in the court rooms as defendent almost as frequent as plaintiff on the prosecution side in the countries claiming themselves having a more advanced IP protection system?


Appendix 1: Document showing the false allegation triggered by illicit private investigator 

Appendix 2: Event history log of maliciour and illicit probing


As the orginal documents contain sensitive, private and confidential information, they were sent to the relevant law enforcement department but could not be disclosed to the public


1. Andrew Gowers: 'Gowers Review of Intellectual Property'

2. The European Parliament has rejected a controversial measure that would have legalized software patents in the European Union.

A government representative said that 648 out of 729 members of the European Parliament voted Wednesday to reject the proposal, called the Computer Implemented Inventions Directive, which would have widened the extent to which software could be patented . The Foundation for a Free Information Infrastructure, or FFII, described the decision as a "great victory for those who have campaigned to ensure that European innovation and competitiveness is protected from monopolization of software functionalities and business methods."  

3. Alliance of 2,000,000 SMEs against Software Patents and EU Directive

An alliance representing a total of 2,000,000 small and medium-sized businesses in Europe says that software patents are harmful for SMEs and that in particular the software patent directive proposal as amended by the European Parliament's Legal Affairs Commission is a grave risk for innovation, productivity and employment in Europe.

4. APOM 2004/04/21: Lettre au Premier Ministre sur le Brevet Logiciel

The French Association of Producers of Multimedia Works (Association des Producteurs d'Oevres Multimédia) condemns the Commission's and Council's approach to software patents and supports the amendments of the European Parliament.

5. Research on the MacroEconomic Effects of Patents 

Since Fritz Machlups report to the US congress of 1958, a considerable number of studies about the economic effects of the patent system has accumulated. Some studies deal with certain types of innovation (sequential, complex systems) or with special areas such as semiconductors, genetics or computing rules (algorithms, mathematics). None seems to claim that the patent system has a positive effect on innovation in these fields. Most find strong indications for negative effects. Some governmental studies (e.g. by intellectual property institutes and the like) combine such negative findings with a recommendation to legalise software patents.

More links to other macro economic researchs on the effect of copyright and patent are available on this site.



We're informed of the instability of URL to our Official blog so we readily built an alternative site at "" on Jan 10, 2008. The site will operate simultaneously  with "" Click the smart icon above to share with their views as members of SME.

由於接獲投訴原明心齋博客網誌"" 連接並不穩定, 我們已於10.1.2008 另建一並行網站""& nbsp; 點 擊上面之智慧圖示進入博客的內心世界, 分享他們作為中小企成員的感受和意見.

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