The Reform of Copyright Protection in the Networked Environment: A Hong Kong Perspective
On 15 April 2008, the Hong Kong government released its preliminary proposals on Copyright Protection in the Digital Environment, which cover the civil and criminal liabilities of online infringers and the role of online service providers (OSPs) in combating internet piracy. The preliminary proposals favor OSPs and users more than copyright owners. The government proposes that the OSPs, the content industries and users should voluntarily create a code of practice which defines the role and scope of OSPs in the fight against online piracy. The OSPs oppose any rules making them liable for copyright infringement and the safe harbor provisions. The content industries, in contrast, insist that, in line with international norms, both OSP liability and safe harbor provisions be written into the code of practice. I argue that, in the absence of any assignment of legal right to any party, the Coase theorem predicts that negotiations will fail. The key issue is which party should bear the transaction costs of copyright enforcement, because there are millions of online infringers; however, if the transaction costs of enforcing copyright in the networked environment are prohibitively high, the credibility of the copyright system will be undermined and online piracy will become commonplace.
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