Hong Kong customs investigators on Friday raided two small interior design companies in Hong Kong, where they arrested employees and seized PC hard disk drives in the first enforcement of a recently introduced criminal law against using pirated software.
The Hong Kong Customs & Excise Dept. had received tips about the suspected use of pirated graphic design applications at the two interior design companies, said Ben Ho, group head of the Intellectual Property Investigation (Administration and Support) Group, in an interview Monday.
In one case, the proprietor of an unidentified company was arrested and four hard disks were confiscated. In the other case, the three employees who were using the pirated software at the time of the raid were arrested and seven hard disks were seized. Both companies had purchased pirated copies of expensive design software. The department may make additional arrests and seizures in both cases depending on the results of further investigations, Ho said. Any IS staff who knowingly installed the illegal software could be arrested, he said.
The Intellectual Property (Miscellaneous Amendments) Ordinance 2000, which took effect April 1, made it a criminal offense to use unlicensed software in operating a business. Offenders can face up to four years in prison and a fine of HK$50,000 (US$6,400) per unlicensed copy. The law is intended as an added deterrent to software piracy and illegal copying, in addition to the threat of civil action by the owners of the intellectual property. It did not criminalize noncommercial use of illegal software.
Both raids were carried out during business hours. The first case involved an interior decoration business in the Wan Chai district of Hong Kong island; the second raid took place in Sha Tin, a city in the New Territories north of the Kowloon peninsula. In the second case, the employees told investigators they knew they were using pirated software.
Both companies were making technical drawings and interior design layouts using an unidentified application that would have cost about HK$20,000 per copy, according to Ho. They were also using pirated software for other functions such as word processing and preparing spreadsheets, he said.
The hard disks will now be used to establish a case against the alleged offenders using computer forensic examination, which may take nine or 10 months, Ho said. It can be difficult to build a case using digital evidence, he said.
"The hard disk contains digital information that's not readily seen," Ho said.
The four-month gap between the imposition of the amendment and the first enforcement raid occurred because investigators were working to prepare airtight cases against both alleged offenders, Ho said. More such raids on other companies are expected in the future, but Ho declined to say how many or when they would take place.
The customs department has received more than 100 tips since the law went into effect and is now receiving 30 to 40 per month. Members of the public can call a special hotline to report suspected use of pirated software in businesses. Investigators follow up with detailed questioning of the tippers.
"We have to make sure it's not a malicious allegation against someone they don't like," Ho said.
The department then checks with the software vendor to make sure the suspected offender in fact hasn't registered the software.
The software piracy law was passed by Hong Kong's Legislative Council along with other strict new rules in the amendment, including one against personal copying of newspaper and magazine articles. That stipulation and others set off a storm of controversy, resulting in the suspension of the changes, but protections for intellectual property in software, movies, TV shows and music have remained in force.
The law seems to have been a successful deterrent to software piracy, with legitimate sales of software soaring over the past several months, said Ho, despite a local economy that has been lackluster at best.
Pirated copies of all kinds of corporate and consumer software, as well as of music CDs and movies on video CD and DVD (Digital Versatile Disc), are widely available in malls and street stalls in Hong Kong at a fraction of the original price.