Web users who make copyrighted music or video available to others on the internet could in future face criminal charges if the actions harm the copyright owners.
But the government has proposed to relax rules on 'media shifting', under which the common practice of copying music from a CD to MP3 format for use in a player such as an iPod would no longer be outlawed.
However, converting a DVD movie for use in a portable player would still be illegal.
These measures are contained in proposals produced after two rounds of public consultations held since December 2006, aimed at overhauling the much-criticised Copyright Ordinance in light of the rapidly changing digital environment.
A paper submitted to the Legislative Council says criminal sanctions should be available against those 'who initiate unauthorised communication of copyright works to the public', when it involves a business purpose or when it 'affects prejudicially the copyright owners'.
But it also said the government would 'consider bringing in appropriate exceptions to facilitate the reasonable use of copyright works'.