Parody and other works which do not constitute copyright infringement under the existing law for any of the reasons below will remain lawful after the legislative amendment -

1. the copyright owner has agreed or acquiesced
2. the copyright protection in the underlying work has expired
3. only the ideas of the underlying work have been incorporated
4. only an insubstantial part of the underlying work has been reproduced, and
5. one of the permitted acts under the existing Copyright Ordinance (such as for the purposes of research, private study, education, criticism, review and news reporting) applies.

The 2014 Bill proposes a number of new copyright exceptions to facilitate users to use copyright works under appropriate circumstances, without obtaining authorisation from copyright owners and attracting any civil or criminal liability:

1. for the purposes of parody, satire, caricature and pastiche ₁ ;
2. commenting on current events;
3. quotation ₂ ;
4. giving educational instruction (especially for distance learning) and facilitating daily operations of libraries, archives and museums;
5. for Online Service Providers (OSPs) to cache data ₃ ; and
6. media shifting ₄ of sound recordings.

Besides, to allay public concerns about the possible impact of the existing "prejudicial distribution offence" under the Copyright Ordinance and the proposed "prejudicial communication offence" ₅ on the free flow of information across the Internet and to provide greater legal certainty, the legislation will clarify the criminal liability for causing prejudice to the copyright owner, and provide that the Court will consider all the circumstances of a case and in particular in the economic prejudice, having regard to whether the infringing material amounts to a substitution for the work.

For uses relating to parody, satire, caricature, pastiche, commenting on current events and quotation, the principal condition for exception is that the use must constitute fair dealing. In determining whether a dealing is fair, the Court will take into account the overall circumstances of a case, including the following factors:

1. the purpose and nature of the dealing, including whether the dealing is for a non-profit-making purpose and whether the dealing is of a commercial nature;
2. the nature of the work;
3. the amount and substantiality of the portion dealt with in relation to the work as a whole; and
4. the effect on potential market for or value of the work.

We have reservations in adopting this concept as a subject matter for copyright exception in this round of update for the following reasons-

1. given the reasonably enlarged scope of permitted acts proposed in the 2014 Bill, it is not clear what additional problem a UGC provision may be able to address. In theory, this may be able to benefit some acts outside the enlarged scope. But this still begs the question why such acts are justified to be excepted from copyright protection;
2. the concept of UGC is broad and undefined. There is no widely accepted definition of UGC at the international level. There is doubt on whether an UGC exception might meet the three-step test ₆ enshrined in the Agreement on Trade-Related Aspects of Intellectual Property Rights of the World Trade Organization, in particular the first criterion i.e. any limitation or exception should be confined to a certain special case;
3. the concept is unsettled and developing. Only Canada has adopted the concept in legislation. Although the Copyright Review Committee of Ireland recommended the Government to follow suit, the Irish Government has yet to make any legislative decision. Australia has rejected the idea, while the United States and the European Union are looking into it one of the issues in their reviews in copyright. The UK does not find a case for regulatory intervention. Hong Kong should remain vigilant about mainstream international development in future.