Why the Hong Kong Bill on Copyright Amendments is Right on the Issue of UGC

Letter by Dr. Mihály Ficsor, Former Assistant Director General of WIPO, Chairman of Central and Eastern European Copyright Alliance

The issue of user generated content (“UGC”) concerns key aspects of copyright, and governments around the world are diligently working to determine the best approach to it. I was the Assistant Director General of World Intellectual Property Organisation (“WIPO”) in charge of copyright during the negotiation and adoption of the two WIPO “internet treaties.” Moreover, the first thorough interpretation of the “three-step test” for exceptions was made by a World Trade Organisation (“WTO”) panel in which I was the intellectual property expert (see WTO document WT/DS/114/R).

In a nutshell, the three-step test for exceptions sets limits on the extent to which exclusive rights under a nation state’s copyright laws can be limited. It allows limitations (i) in certain limited special cases; (ii) that do not conflict with the normal exploitation of the work; and (iii) that do not unreasonably prejudice the legitimate interests of the author or right-holder. The three-step test appears in the Berne Convention (Article 9(2)), the WTO’s Agreement on Trade Related Aspects of Intellectual Property Rights (“TRIPS”) not only for copyright (Article 13) but also for patent rights (Article 30), the WIPO Copyright Treaty (the “WCT”) (Article 10) and the WIPO Performances and Phonograms Treaty (the “WPPT”) (Article 16).

Given my expertise, I followed with interest the preparation of the Canadian provisions on UGC, and I pointed out the unintended consequences they might create, in particular, the possible conflicts with the WIPO Treaties and the three-step test (see www.copyrightseesaw.net). In the meantime, the issue has also been addressed in the framework of the recent European Union consultation on the future of copyright, in which I intensively participated as the chairman of the working group on UGC in my country. I have noted with satisfaction that the draft White Paper recently published by the European Commission summing up the results of the consultation (made available through the IPKat weblog – ipkitten.blogspot.com – on 23 June 2014) has adopted a prudent approach which accords with our main suggestions.

While in Canada a broad exception was introduced for any “non-commercial” transformation of any kinds of protected works (with the possibility of uploading the adaptations on commercial online systems), the Commission’s White Paper has found that the existing exceptions (in particular for the purpose of parodies and quotations) along with new inventive licensing techniques offer due freedom for UGC creation without getting into conflict with the protection of pre-existing works.

This is why I also follow with attention the preparatory work of the copyright amendments in Hong Kong where the issue of UGC has also surfaced. There are at least seven reasons for which Hong Kong policy makers are right to follow the judicious European approach rather than rushing to legislate on UGC as a generic concept.

First, the Copyright (Amendment) Bill 2014 does address the issue of UGC where it is necessary for establishing due balance of interests, for guaranteeing freedom of expression and for providing an adequate legislative basis for flourishing creativity of online users – but only there. The Bill contains provisions on parody, a typical form of UGC creation which truly should not be subjected to authorisation by the authors of the “targeted” works because it could unduly restrict the freedom of expression. This has been a concern in the EU as well; the above-mentioned draft EC White Paper points out exactly the availability of exceptions for parody, quotations and incidental use of works when it concludes that no general UGC exception is needed.

The Hong Kong Bill also includes provisions on a quotation exception; this is specifically provided in Article 10(1) of the Berne Convention under strict conditions for certain purposes such as commenting on existing works. In view of this, it is not clear what else the separate exception for “commenting on current events” might mean under the Bill. In order to avoid possible conflicts with the international treaties, it would be advisable to clarify and narrow the scope of that exception, preferably along the lines of Article 10bis of the Berne Convention.

Second, the concept of UGC is too broad and vague. As a result, a general exception for UGC may hardly meet the first condition (“step”) of the above-mentioned three-step test, namely, that an exception may only be provided in a special (eg, limited and duly determined) case, but, in fact, it would not be in accordance with the test’s other two conditions either. This would also be true if the concept were somewhat narrowed to adaptations of existing works by users.

The third reason is that opening the gates broadly, for any kind of UGC, might also lead to conflicts with authors’ moral right under Article 6bis of the Berne Convention to oppose any alteration of their works that would be prejudicial to their honour or reputation.

Fourth, there does not seem to be any real need to legislate on UGC as a general concept. The situation is no different in Hong Kong than it is in the EU, and the above-mentioned draft EC White Paper notes: “There is a lack of evidence that the current legal framework for copyright puts a brake on or inhibits UGC (absence of ‘chilling effect’)”.

The fifth reason is that the criterion frequently presented as a guarantee to avoid conflicts with normal exploitation of works – namely that a general UGC exception would only be applicable in the absence of commercial purposes – is hardly a true guarantee. If an unauthorised adaptation (see Article 12 of the Berne Convention) is uploaded on the Internet without profit-making purposes, its impact on the normal exploitation of the works concerned (the second part of the “three-step test”) is hardly different from the case where profit is a purpose! (The difference is not in the loss caused to the owners of rights but only in the profit gained by others.) It is notable that even if the adaptation does not generate profit for its creator, the websites on which UGC adaptations are included are themselves usually profit-oriented (based, in general, on advertisement money).

The sixth reason is that appropriate licensing mechanisms have been developed and are ever more broadly offered by owners of rights and their representative bodies. The EC White Paper mentions this as a fundamental means of facilitating UGC creation. The system outlined on the www.ugcprinciples.com website and applied in practice on YouTube by Google is also a good example.

The final reason is a genuine “last-but-not-least” one and may also serve as a summary: “Mash-ups”, “memes”, and similar electronically generated secondary productions based on existing works are widespread new forms of creativity which in certain specific cases (such as parody) should be supported by fine-tuned exceptions. However, they may not be regarded as being able to come anywhere close to replacing “mainstream” original works requiring serious creative efforts and financial investments. Possible exceptions aimed at facilitating secondary productions must not endanger the sustainable creation and production of the primary works.

The draft EC White Paper warns that, although new exceptions may result in easier access in the short term to existing works for certain uses, “[t]he economic incentive to create and to invest in new works could weaken, with the dynamic, medium- to longer-term effect being that the production of creative content could be reduced.”

This would be a most undesirable outcome; it is a key reason why the EU is not accepting the principle of a general UGC exception. I believe Hong Kong has solved the freedom of expression issue through the exceptions mentioned above, and implementation of a broad UGC exception by Hong Kong would be unwise, unnecessary and inconsistent with the international treaties.