Film industry outcry

By Dephanie Yeung

The decriminalization of parallel imports under the Copy- right Bill has put the government and the local film industry at loggerheads.
    The Trade and Industry Branch presented the Copyright Bill to the Legislative Council in February. It proposed to decriminalize parallel importation of computer programs, books, sound records and films.
    Parallel importation involves products lawfully manufactured abroad but imported without the authorization of the copyright owners or exclusive licensees in the place of importation.
    The new proposal amends the 1956 Copyright Act by abolishing criminal sanctions but retaining civil remedies.
    It is expected that cheaper parallel-imported products will surge into the market if the bill is passed.
    Mr. Patrick T. K. Nip, principal assistant secretary of the Trade and Industry Branch, said the Law Reform Commission’s recommendation to decriminalize parallel importation was adopted with two considerations.
    “First, should importers of genuine products merit serious criminal offence? Second, is it good to consumers if copyright owners divide their markets by distributing different exclusive licensees?” asked Mr. Nip.
    Regarding the second point, it is implied that consumers may have to pay higher prices for products manufactured by local exclusive licensees.
    Mr. Nip said the proposed bill is trying to clarify the vague provision in the 1956 Copyright Act.
    This is because under the existing law, exclusive licensees have the right to sue parallel importers, but case law did not provide them with a right to sue. “In practice, there is not much difference from before,” Mr. Yip said.
    The branch believes maintaining civil remedies strikes the best balance between various interests.
    Said Mr. Yip: “Competition from parallel imports counters the interests of local exclusive licensees. They cannot sell their agent’s products at too high a price.”
    It also has to recognise the importance of a high standard of copyright protection and distribution of films, since Hong Kong is the second largest global film exporter, from their perspective.
    The film industry is one of the opponents of decriminalization of parallel imports.
    Mr. Gordon Chan Ka Seung, a spokesman of the Hong Kong Directors’ Guild, said, “Such a proposal is simply ridiculous. It protects the foreign film industry at the expense of the local market.”
    This is because in past criminal lawsuits, foreign producers were required to be present personally in the place of parallel importation. But the decriminalization will remove the obstacles that parallel-importers can be sued more easily.
    Said Mr. Chan: “Video shops dare not parallel-import foreign language movies when the suing procedure is simplified to civil remedies.”
    He said it is not cost-effective to use civil sanctions against the importers. “Sometimes the cost of suing is greater than the compensation.”
    Mr. Chan said the situation of parallel imports of local films was not serious. But he predicted that the amount of parallel imports will increase soon.
    “In the short run, the market will be flooded with cheap parallel local copies,” said Mr. Chan, “but in the long run, there may be no production of local films because the return to producers goes to the pockets of parallel importers.”
    Said he: “For fear of being sued by foreign film producers, they become parallel importers of local movies.
    “The competition from the back flow of parallel imports may further reduce the copyright fees to such an extent that it will smash the Hong Kong film industry,” said Mr. Chan.
    He said that the process of accumulating capital will also become more complex.
    “Before producing the film we normally pre-sell the copyright to accumulate capital,” Mr. Chan said. “Such a proposal deters us from pre-selling. This makes local production difficult.”
    He said film producers are nervously discussing the issue.
    Said he: “The attitude behind the proposal is right. But the government does not fully understand the mechanism behind the Hong Kong film industry.”

*A rally was held to oppose the Copyright Bill.*
Chloe Chan

May 1997
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