Hong Kong set to nab users of pirated software

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By Stephen Lawson

(IDG) -- The Business Software Alliance (BSA) has already received dozens of tip-offs about companies using unlicensed software in violation of a new law that puts criminal penalties on users.

The Hong Kong branch of the international organization received about 30 tips in March alone, and has been further investigating the claims before it decides whether to bring complaints against the companies using the software, said BSA Hong Kong Vice President Ringo Wong in an interview Tuesday.

The Hong Kong Government's Intellectual Property (Miscellaneous Amendments) Ordinance 2000, which took effect April 1, extends criminal penalties for unlicensed software from sellers to corporate users. Before this law, companies that used unlicensed or illegally copied software could be punished only by a lawsuit.

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Wong spoke after a seminar at which BSA and the Hong Kong government told business people about the new penalties and ways to prevent unauthorized use of software in their companies. Though the English-language seminar on Tuesday drew just a handful of attendees, it was scheduled along with three Cantonese-language seminars after events last week drew overflow crowds.

A survey last year showed 56 percent of the software sold in Hong Kong is pirated or illegal, according to BSA. That rate is lower than for China and many Southeast Asian countries -- which had piracy rates as high as 98 percent, in the case of Vietnam, according to 1999-2000 figures from the International Intellectual Property Alliance (IIPA), a private sector coalition in Washington D.C. which represents copyright based industries. Nevertheless, the Hong Kong government is cracking down on the practice amid attempts to nurture the territory's own software industry.

"We are trying to encourage establishment of an intellectual property industry," said William Chow, senior superintendent of the Customs & Excise Department in charge of enforcement, in an interview after the Tuesday seminar. The government currently is giving financial assistance to small high-tech startups and backing development of high-tech business centers in hopes of creating an IT industry that can compete with the world.

If companies buy pirated copies of local software, that nips the software industry in the bud, he said. Moreover, if local companies want their rights protected, Hong Kong must itself comply with international norms such as World Trade Organization standards, Chow added.

"It's a reciprocal relationship," he said.

Similar steps are being taken in other countries in Asia-Pacific, where in many locations software piracy is rampant. Chow said mainland China, Malaysia, South Korea and Taiwan all have either outlawed the use of illegal software or are moving to do so. The IIPA last year estimated China's software piracy rate at 91 percent, Malaysia's at 71 percent, South Korea's at 50 percent and Taiwan's at 54 percent. The IIPA estimated piracy rates for countries on the U.S. government's "Super 301" list of monitored countries, on which Hong Kong no longer appears.

The Hong Kong government does not have any cases in progress based on the new law because no complaints have been brought, Chow said. BSA's Wong would not estimate how soon the tips already received can be evaluated for possible action by BSA on behalf of software vendors.

The Customs & Excise Department has close to 500 officers to carry out investigations and raids, Chow said. However, it can't go after a suspected user of pirated software unless the vendor provides expert witnesses and a way to prove the software is illegal.

Both employees and top executives of a company using pirated software could face jail sentences as long as four years for violating the law, in addition to fines of as much as HK$50,000 (US$6,411) per illegal copy. An additional penalty could come in the form of a company's computers being seized in a raid, along with critical corporate data, BSA's Wong pointed out.

Chow said a government crackdown has cut down the pirate software industry to about 100 retail outlets and less than 100,000 pirate copies of software, from about 1,000 outlets and 5 million illegal copies about two years ago. However, apparently illegitimate copies of many popular PC applications still are readily available in some districts of Hong Kong, at a fraction of the price of legal software.

"The situation in Hong Kong is quite severe," BSA's Wong said. Stemming demand will take a great deal of education yet, he added. "Most people are not very informed about computers."

The BSA can be reached in Hong Kong at www.bsa.org/hongkong.

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