Are you a partner or director responsible for your company's internal management? If so, you may be at risk from the proposed changes to Hong Kong's Copyright Ordinance now being scrutinised by the Legislative Council. The government plans to make directors and partners who are responsible for internal management criminally liable for certain intellectual property infringements made by their companies and their employees in the course of their employment unless they can show they did not authorise the infringing acts. This is a worrying development. It is a long-established rule in criminal law that the government, acting as the prosecutor, has the burden of both coming up with sufficient evidence and proving the case beyond a reasonable doubt. The existing ordinance is consistent with this rule. It says that a partner or director can be found liable only if the government proves that he or she consented to, or connived with, the copyright infringer. But the government finds the burden too heavy to carry. So, it plans to shift the evidential burden to the defendant. The government retains the burden of proving the offence. In other words, it will be the director's or partner's responsibility to provide enough evidence to absolve them of blame. But what is sufficient evidence? The government has provided a list of factors the court should consider, such as the introduction of policies against piracy and setting aside financial resources to prevent the use of infringing copies of copyrighted works. These guidelines are clearly not enough - especially as we are talking about criminal liability. For example, the guidelines give no indication of the amount of financial resources that should be set aside for the purpose. Surely these factors are all relative. The government's proposals will also place a massive burden on the day-to-day responsibilities of directors and partners. The average small and medium-sized Hong Kong business most likely has one or two directors and partners who are frantically attempting to keep the company afloat in a competitive world with multiple staff members under their control. Under the proposal, partners and directors will have to divert resources to ensure they will not face criminal liability for, say, the one employee who possesses an unlicensed computer program or pirated song. Given that the proposed law also seeks to create an entirely new criminal offence against unlicensed distribution of newspapers, magazines and books, senior management will have a great deal to supervise and worry about. If the new liability goes through, top executives will no longer be able to treat company piracy as just an operational cost to be mitigated against with insurance - no insurer will go to jail on the executive's behalf. Also, in criminal law the criminal must be aware that they are committing a crime if they are to be held liable. As a partner myself, I cannot be presumed to be aware of a crime being committed any time one of our employees does so. Our company, like many others, do not just have one office. This is a daunting thought. Surely we can find a better balance between protecting intellectual property rights and ensuring the smooth daily running of Hong Kong businesses. Jailing executives as a weapon against piracy is likely to deter foreign investors. The government has already backed down on earlier proposals to make anyone carrying out 'chief executive functions' criminally liable in instances of piracy by an employee. At least the current proposal reduces this to those responsible for 'internal management', but even this term requires clearer definition. All directors, by their very nature, could be considered managers of the company. Overseas models offer some viable alternatives. In Britain and Singapore, copyright laws impose liability on partners only for offences committed by that partnership. No liability is imposed wholesale on the entire group of directors or partners. Even in the United States, where liability can be imputed on the 'responsible corporate officer' solely on the basis of their position in the company, such occurrences are limited to laws relating only to individual health and well-being, and not copyright laws. The UK and Singapore models appear the most appropriate for Hong Kong to adopt. We should impute liability on directors only when they are directly responsible or involved in the infringement. Imputing criminal liability on top executives is too great a punishment for this type of crime. The proposed law is in the final stages of legislation, with legislative councillors already vetting the wording. Until now, opposition to the proposal has not focused on the issue of directors' liability. It is time for that to change. Yvonne Chia is an IT/Telecom partner at Stevenson, Wong & Co
