From April 1 new controls close loophole by making possession of illegal programs an offence.

So what is Stephen Selby banging on about? The Director of the Intellectual Property Department of the Hong Kong Government (the IPD) is in the middle of a roadshow of seminars around the territory in which he's trying to generate publicity for the Intellectual Property (Miscellaneous Amendments) Ordinance.

Although it does not have a catchy title, it is worth paying attention to this new ordinance. Mr. Selby's message is that you had better listen because the ordinance comes into force on April 1 - and bad thinks may happen if you ignore it.

Should we believe the promotion, is the new ordinance really going to change anything? Its primary purpose is to help combat corporate copyright piracy activities.

With the undoubted prevalence of pirated software, music and movies in Hong Kong, few can argue with this stated goal (the latest survey commissioned by the Business Software Alliance indicates that more than one in two business software applications in use in Hong Kong is pirated).

The way that the Ordinance seeks to address the problem of copyright piracy is by tightening up the definition of copyright infringement. Currently it is an offence to possess an infringing copy of a copyright work for the purpose of trade. Clear enough - if you hold stocks of counterfeit software which you intend to trade in, then you will commit an offence.

The Government, however is concerned that there is a loophole in that the offence may not cover cases where the trade of the business in question is something other than selling or dealing in the infringing software. The new Ordinance seeks to address this issue by widening the definition of copyright infringement to include possession "in the course of, or in connection with, any trade or business".

Take the example of a company whose employees use counterfeit software in the course of their work. Under the existing legislation, it is arguable that the company would only commit an offence if it actually trades in the software. However, under the new legislation, the possession by the company of counterfeit software will give rise to an offence, regardless of whether it is trading in the software. The consequence of such an offence can be severe with a possible fine of up to HK$50,000 for each infringing copy of the software in the company's possession. If multiple copies of software are being used, then this can soon add up to a very substantial fine.

However, it's not only companies which have counterfeit software on their computers that risk prosecution. For example, offences may be committed by the following individuals:

(i) Directors who consent or arrange for counterfeit software to be used by their companies;

(ii) IT managers who load counterfeit software on to their employer's computer systems (even if they act on the instructions of their superiors); and

(iii) Individual employees who load or use counterfeit software on their PCs.

The maximum penalty for an individual under the Ordinance is a fine of HK$50,000 per infringing copy plus 4 years' imprisonment.

It's also worth noting that the Ordinance is not just limited to counterfeit software. Offences will also be committed by using software outside the scope of the licence provided (such as allowing 50 employees to access software in respect of which a 10 person licence has been purchased).

The only good news is that if you can show that you didn't know that you were using infringing software and that you had no reason to believe that it was infringing software then you will have a defence under the Ordinance. However, the onus will be on you to demonstrate this and this won't be easy unless you can show that you have made appropriate checks as to whether the software in question is infringing.

So, it appears that it is worth listening to Mr. Selby. As of 1 April 2001, companies and their employees who use infringing software are going to face significantly greater risks.

The message is clear, companies should audit their systems for existing infringing software and instigate appropriate procedures to avoid having such software on their systems in the future. Employees should not be permitted to download or bring counterfeit software into the work-place, as even something as trivial as an infringing screensaver can result in a conviction and fine for both the employee and his employer.

First published in SCMP Technology Post on 6 March 2001.