1. The Consumer Council welcomes the invitation for comments on the Government's proposal to amend the Copyright Ordinance to remove the criminal and civil liabilities relating to parallel importation of computer software.
Claimed Benefits of Liberalization
2. It is noted in the Consultation Paper, that liberalizing the market for these products:
(a) recognises the fact that online purchases generally through the Internet are breaking down regulatory barriers that exist in domestic markets;
(b) will increase competition and availability of products in the market, resulting in more choices and lower prices for the consumer, including small and medium enterprises; and
(c) will ease the financial burden in replacing pirated computer software with legitimate products.
Council's Views
3. The Council agrees, in general, with the above observations and therefore is in agreement with the Government's proposal to remove the criminal and civil liabilities relating to parallel importation of computer software.
4. Nevertheless, in indicating its support for the proposals, the Council would also raise a query as to the adequacy of consumer safeguards to protect consumers from misleading and deceptive practices in the marketplace, where infringing articles, such as pirated software, may be sold.
5. The question as to what is an infringing article is a complex question of law, and it can be difficult for consumers to both understand what is illegal copying, and to detect that there has been illegal copying. Accordingly, the Consumer Council stresses the need for adequate safeguards to protect consumers against the actions of unscrupulous suppliers of pirated software who may take advantage of the complexities that arise, and confusion that could ensue in the minds of consumers, to misrepresent pirated product as genuine product.
6. The Council recently released a report - 'Regulating Deceptive, Misleading and Unfair Practices in Consumer Transactions' that examined the levels of safeguards currently existing to protect consumers. (The report is available from the Council's website - www.consumer.org.hk).
7. As a long term measure, the Council has recommended that the Government should consolidate the various consumer protection laws with necessary amendments and new provisions into a piece of comprehensive trade practices legislation that should contain the following characteristics:
(1). Prohibitions against traders from engaging in, inter alia, deceptive, misleading, unfair and oppressive conducts in the course of consumer transactions.
(2). Breaches of the prohibited trade practices should incur strict liability and lead to both criminal and civil penalties. The penalties may include pecuniary fines in order to deprive the delinquent trader of the profits of the unlawful activity.
(3). The law should provide a fair and adequate consumer redress mechanism for injured consumers, which may, for example, take the form of monetary compensation, repair order or restitution order.
(4). The proposed legislation should be enforced by a public agency.
(5). The enforcement agency should be empowered, inter alia, to institute court proceedings against offenders by seeking court orders for declarations, injunctions, specific performance, damages, etc.
(6). The enforcement agency should be empowered to accept voluntary assurance or undertaking of compliance from traders who have engaged in unfair and deceptive practices and to enforce the undertaking if breached.
(7). It should also be empowered to order publication of correction notices or institution of corporate compliance programmes.
(8). The agency should also be empowered to prescribe codes of practices for the conduct of business in specific sectors.
8. The Council trusts that its support for the liberalization of the restrictions on parallel importation of software will be met with a close examination of the consumer safeguards that are necessary to ensure that consumers do not become victims of unscrupulous marketing practices that may arise from the new environment.
