!

"# Intellectual Property Practice

Dismissing the Appeal of ‘Big Crook’

So far, the criminal conviction
and custodial sentence for file
sharing stands. Wing L Cheung
highlights the unique features
of this case as compared with
o t he r w e l l - k no w n c a s e s
involving the use of similar
technology, paying particular
attention to the meaning of
the word ‘distribute’ in the
Copyright Ordinance
Photo: Jorge Figueiredo

Introduction To r e c a p i t u l a t e , C h a n w a s of the Copyright Ordinance (Cap

The conviction of Chan Nai Ming at
Tuen Mun Magistracy on 24 October
2005 (HKSAR v Chan Nai Ming,
TMCC 1268/2005) is only part one
of the ‘Big Crook Case’. On 12
December 2006, Hon Beeson J
delivered a 31 page judgment
dismissing the appeal by Chan
against his conviction and sentence
(HCMA 1221/2005).
convicted by Magistrate Mr Colin
Mackintosh of three charges of
attempting to distribute an infringing
copy of a copyright work (otherwise
than for the purpose of, in the course
of, any trade or business) to such an
extent as to affect prejudicially the
owner of the copyright, without the
licence of the copyright owner,
contrary to ss 118(1)(f) and 119(1)
528) (the Ordinance) and s 159G of
the Crimes Ordinance (Cap 200). He
was sentenced to three months’
imprisonment on each charge and
the sentences were ordered to run
concurrently.
The appeal judgment has
apparently been widely welcomed. In
particular, intellectual property
rights owners and the entertainment

==01 • 2007
 ! Hong Kong Lawyer 43

Intellectual Property Practice
industry are delighted by the clear
terms in which Hon Beeson J has
rejected the argument that ‘copies’
under the Ordinance must involve
physical material entities.
Needless to say, the decision of
Hon Beeson J in relation to the
meaning of ‘copies’ is an important
statement of law. That said, it is
useful to note that the ‘Big Crook
Case’ has many other important
implications. The purpose of this
article is to highlight the unique
features of this case as compared to
other well-known cases involving the
use of file-sharing technology, and to
examine the way in which the word
‘distribute’ should, in light of the
appeal judgment, be understood in
the context of s 118(1)(f) of the
Ordinance.
Unique Features of
the Big Crook Case
The general description that the Big
Crook Case is ‘the first of its type’
requires closer examination. While
this is indeed the first criminal
prosecution in Hong Kong under sub-
s (1)(f) of s 118 of the Ordinance, the
appeal judgment is in fact just
another addition to the library of
cases around the world involving the
use of file-sharing technology. This
should be readily understandable, as
the use of file-sharing technology
began to gain popularity long before
the release of BT (Bit Torrent) in
2001.
Many readers will be familiar with
the United States case of A&M
Records, Inc v Napster, Inc, in which
the plaintiff was granted a
preliminary injunction against
Napster, a peer-to-peer music sharing
software provider. In the more recent
United States case of Metro-
Goldwyn-Mayer Studios Inc et al v
44 Hong Kong Lawyer =
 ! 01 • 2007

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Grokster, Ltd et al, the action was
taken by the Plaintiff against
Grokster, a distributor of free
software allowing peer-to-peer file
sharing. In each of these well known
cases, the legal battle is civil in
nature, engaging commercial entities
with huge monetary interests at
stake. Clearly this has to be
differentiated from the position of
Chan, an individual BT seeder, who
faces criminal charges.
One may find Chan’s position to
be similar to that of the defendants
in the ‘Tiger Leak Case’ in the United
States (Apple Computer, Inc v Doug
Steigerwald, et al). In that case,
Apple Computer, Inc sued three
software developers of the Apple
Developer Connection (ADC)
program for disseminating on BT the
then pre-release version of Mac OS
version 10.4 ‘Tiger’. The similarity
arises not only because those
defendants are also individuals, but
also that the United States Attorney’s
Office has launched criminal
investigation. In so far as the civil
case is concerned, Apple has released
a statement confirming its settlement
with all the defendants. However, the
statement provides no information
on the current status of the criminal
investigation.
Meaning of ‘Distribute’ –
Decision at Magistracy Level
Section 118(1)(f) of the Ordinance
is in the following terms:
A person commits an offence
if he, without the licence of the
copyright owner…distributes
(otherwise than for the purpose
of, in the course of, or in
connection with, any trade or
business) to such an extent as
to affect prejudicially the
owner of the copyright, an
infringing copy of a copyright
work.
The word ‘distribute’ is not defined
in the Ordinance. According to The
Oxford Dictionary, distribute means
‘hand or share out to a number of
recipients’. In Words and Phrases
Legally Defined, it is defined as
‘delivery of something to several
persons’ (quoting the Canadian case
of R v McNiven [1944] 1 WWR 127
at 128, per Doiron J).
Whether Chan’s acts constituted
distribution was argued extensively
both at the magistracy level and on
appeal. Before the Magistrate, it was
argued that the word ‘imports a
positive act’ and the defendant’s acts
were purely passive. The defence
invited the Magistrate to confine to
the time of the downloading,
submitting that:
…the acts were those of the
downloaders, not the defendant,
whose role at that stage was
entirely passive. What was done
was not a distribution by the
defendant. He did no more than
leave his computer in a state
whereby others, if they chose to
do so, could access it and take
material from it.
Although the Magistrate found
this argument unsustainable, he did
not go to the extreme of holding that
distribution can be a passive act. He
looked beyond the time of the
downloading and found as a fact that
the defendant had acted positively to
distribute the infringing copies of the
copyright films:
The defendant loaded the files
into his computer, he created

the .torrent files, he created the
images of the inlay cards and
imprinted them with his logo,
the statuette; he published the
existence of the .torrent files,
and the name of the films in
question, on the newsgroup, so
that others would know where
to go to download. He said, in
effect, “Come here to get this
film if you want it.” He activated
the .torrent file, so as to enable
others to download. He kept his
computer connected and the
BitTorrent software active to
allow the downloading to take
place. The downloading
involved the dissemination of
the data comprising the
infringing copies. His acts were
an essential part of the
downloading process and were
continuing throughout the
downloading, even if he had not
been sitting at the computer at
all times. These acts were an
integral part of the enterprise of
downloading the infringing
copies to other computers. This
amounted to distribution...This
was not merely “making
available” the BitTorrent files.
These were positive acts by the
defendant, leading to the
distribution of the data.
Meaning of ‘Distribute’ –
Decision on Appeal
On appeal, it was argued on behalf of
Chan that since the ordinary
meaning of ‘distribute’ is ‘to hand or
share out to a number of recipients’,
distribution must require a physical
transfer of a tangible object, such as
paper, magnetic tape or CD, from the
distributor to the recipient. It was
further submitted that if there is no
physical transfer, there cannot be

 !"#
distribution of copies in the copyright
sense. Counsel for Chan emphasized
that:
…during downloading, the
copies of the films in the
Appellant’s computer stayed on
the computer’s hard disk and
memory but this hardware, a
tangible object, was never
transferred to the downloaders.
Counsel for Chan also relied on s 26
of the Ordinance, which refers
specifically to ‘making available of
copies of works through the service
commonly known as the INTERNET’,
submitting that s 26 recognizes an
‘Internet right’. It was argued that the
adoption of the Internet right in s 26,
in addition to the distribution right
in s 24, showed that it was not the
intention of the legislature of Hong
Kong that making a work available on
the Internet should amount to
distributing copies of that work.
In response, Counsel for the
Respondent (HKSAR) invited the
Court to give s 118(1)(f) of the
Ordinance ‘a fair, large and liberal
construction and interpretation’ in
accordance with s 19 of the
Interpretation and General Clauses
Ordinance (Cap 1). Counsel also
referred to two decisions where the
meaning of distribution was
considered. In particular, counsel
relied on a case heard in the United
States Court of Appeals – Donna R
Hotaling & Others v Church of Jesus
Christ of Latter-Day Saints. This case
relates to making available copyright
materials for borrowing or browsing
in a public library. The question is
whether such an act constituted
infringement of the Plaintiffs’
exclusive right to distribute copies of
the materials to the public under the
Intellectual Property Practice
relevant legislation.
In that case, the Court of Appeals
found in favour of the plaintiffs.
Senior Circuit Judge Butzner said:
When a public library adds a
work to its collection, lists the
work in its index or catalogue
system, and makes the work
available to the borrowing or
browsing public, it has
completed all the steps
necessary for distribution to the
public. At that point, members
of the public can use the work.
Hon Beeson J agreed that in
interpreting s 118(1)(f) of the
Ordinance the ordinary meaning of
‘distribution’ should be adopted.
Against the argument that
distribution must involve a tangible
object, the learnt judge referred to
s 23(2) of the Ordinance which
provides that:
Copying of a work means
reproducing the work in any
material form. This includes
storing the work in any medium
by electronic means.
The learnt judge also accepted
that there are various sections of the
Ordinance showing that storage by
electronic means of digital copies was
an integral element of the Ordinance
(ss 23(2), 198 and 23(6)) and that the
legislature intended to safeguard
copyrighted works that existed in
digital form (ss 2(1)(a), 4(a), 17(6),
23(2) and (6), 26(1) and (2), 29(1)
and (4), 32(2) and s 198).
W h e n d e a l i n g w i t h C h a n ’s
contention about s 24 of the
Ordinance (that if s 24 covered
copyright works not in tangible form
there was no need to enact s 26), the
==01 • 2007
 ! Hong Kong Lawyer 45
Intellectual Property Practice
learnt judge was prepared to make
use of ‘extraneous materials’ to assist
in statutory interpretation, applying
the rule in Pepper v Hart (1993) AC
593 as applied in HKSAR v Yau Mee
Kwan (2004) 1 HKC 525. The learnt
judge took the view that s 26 of the
Ordinance was enacted to give
additional protection to copyright
owners and this intention of the
legislature was shown by the speech
of the Secretary for Trade and
Industry when introducing the
enactment of s 26:
In devising our own copyright
regime, we also have to ensure
that the copyright law we put
in place can cater for
technological advances and suit
local circumstances…we
propose to protect the interests
of copyright owners in the
digital environment…We have
accordingly included in the
Copyright Bill provisions to
reflect this consensus, which
embodies the guiding principle
that the rights of copyright
owners must be suitably
balanced against the reasonable
expectations of all users of the
Internet and Hong Kong’s
Internet service providers.
An Undecided Point – Does
Distribution Involve Successful
Receipt of Data?
Before leaving the discussion about
the meaning of distribution, it may
be worth pointing out that when the
Magistrate came to his decision he
seemed to have placed weight on the
fact that the film files uploaded by
Chan were successfully downloaded
by three downloaders, including a
Customs officer. It is not clear if it is
the Magistrate’s view that distribution
46 Hong Kong Lawyer =
 ! 01 • 2007

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must involve successful receipt of the
data in question. This point was not
argued on appeal. In any event, it
may be useful to note that there are
authorities tending to show that
successful receipt of data is not a
necessary element of distribution.
The case of Donna R Hotaling v
Church of Jesus Christ of Latter-Day
Saints has already been discussed
above. The case of Playboy
Enterprises, Inc v Chuckleberry
Publishing, Inc is another United
States case along the same line. In
that case, the conduct under
complaint was the placing of
infringing images on an internet
server located in Italy. It was held
that the conduct amounted to
distribution of the images within the
United States, since the defendant
‘caused and contributed to their
distribution’.
Closing Remarks
The fact that Chan is now serving
custodial sentence may have
attracted some sympathy. In giving
his reasons for sentence, the
Magistrate has the following to say
about Chan:
Despite the handle which he
rather flippantly adopted, he is
not a bad man, he is not a big
crook. He is an ordinary family
man with the usual family
responsibilities who has used
his undoubted knowledge of the
Internet, and the time he had
available when he was
unemployed, for illicit purposes.
However, the criminality and
seriousness of this case has to be
appreciated in light of the Court of
Appeal case of Secretary for Justice
v Choi Sai Lok [1999] 4 HKC 334
(in which it was decided that
immediate custodial sentence should
be imposed for offenders under s 118
(1)(d) of the Ordinance), and the
often cited judgment of Leonard J in
R v Ng Wai Ching (HCMA 1309/96):
There is international pressure
upon Hong Kong to stamp out
traffic in pirated goods. Failure
to attack the illegal
activity…would be perceived as
a default on the part of the
government on its international
obligations.
Chan may lodge a further and final
appeal to the Court of Final Appeal.
So will the ‘Big Crook Case’ extend
to part three? The answer depends
of course on a number of factors.
Legally speaking, Chan must first
obtain leave under s 32 of the Hong
Kong Court of Final Appeal
Ordinance (Cap 484), on the ground
that ‘a point of law of great and
general importance is involved’ or
that ‘substantial and grave injustice
has been done’. In so far as the first
limb of the requirement is concerned,
given the nature of this case and the
arguments presented on appeal, it
seems likely that any application for
leave by Chan would be readily
granted.
Wing L Cheung
Kirkpatrick & Lockhart Preston
Gates Ellis
wingl.cheung@klgates.com
Formerly, Senior Government
Counsel, Prosecutions and Law
Drafting Divisions, Department of
Justice

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 ! Hong Kong Lawyer 47

Intellectual Property Practice
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==01 • 2007
 ! Hong Kong Lawyer 49