By P.T. Bangsberg, The Journal of Commerce Knight-Ridder/Tribune Business News

HONG KONG--Mar. 16--Stiffer penalties are on the way for violators of intellectual property rights ``to protect Hong Kong's hard-won international reputation as one of the world's leading business centers.''

Trade and Industry Secretary T.H. Chau said Wednesday that legislation will be introduced this month stipulating a maximum penalty for possession of pirated copyright works for trade and business purposes of 25,000 Hong Kong dollars (US$3,205) per copy and two years' imprisonment.

Four-Year Jail Sentences Repeat offenders could be fined HK$50,000 per infringing copy and be jailed for four years.

Possession of apparatus to manufacture bootleg copies could bring a fine of HK$250,000 and four years in jail against HK$50,000 and two years now. Repeat offenders face double those figures.

The new levels contrast with the current maximum fine of HK$1,000 for each counterfeit copy and one year in jail. Those levels are among the lowest in Asia and have not been changed for some years.

In the 12 months through last November, Hong Kong customs seized more than 180,000 copies of pirated compact discs with an estimated value of HK$7.2 million. All had been imported.

More than 500 cases went to court, which resulted in sentences ranging from 50 hours of community service to the maximum HK$1,000 fine. But the lowest fine was HK$1.85 a copy and the average HK$70.

``Clearly, the existing penalties have failed to provide sufficient deterrent against copyright piracy. We need to increase the penalties substantially to demonstrate to both the local and international communities our determination to combat copyright piracy,'' Mr. Chau said.

Loophole Plugged The new law will also plug a loophole in existing legislation by making ``persons of a body corporate of a partnership'' found guilty of infringement also liable to the penalties.

The government will add some 20 posts in the intellectual property investigation bureau of the Customs and Excise Department to help enforce the law, Mr. Chau said.

Hong Kong prides itself on protecting intellectual property in such things as computer programs and audiovisual material. But the porous border with China - a flagrant offender - means counterfeits are readily available.

A spokesman at customs said they are braced for a new spate of pirated goods now that China has pledged to crack down on its violators. ``Factories in southern China will want to get rid of their stocks before the police raid them,'' he said.

Many of the plants producing illicit copies of computer programs, laser disks and compact audio disks are owned by relatives or friends of Chinese government officials. This has given them some cover in the past, but the recent Sino- U.S. accord may leave them more exposed.

Ranked in the Middle The Software Publishers' Association, an American-based group of companies producing computer programs, estimates Hong Kong's piracy rate last year in such items was 59 percent equating to losses of US$44 million. The 1993 figures were 78 percent and losses of US$50.3 million.

On that ranking, Hong Kong comes about in the middle of the group's table of Asian infringers. China takes top spot with a piracy rate last year of 98 percent and losses estimated at US$187 million.

The Business Software Alliance, another U.S.-based computer group, this week took legal proceedings against Hong Kong's privately run City College and three associated institutions for use of illegal software.

``These commercial colleges are in the business of computer eduction,'' said Valerie Colbourn, a vice president of the BSA. ``Clearly, an important part of their curriculum should be the ethics of legal software use.''

She said a worrying aspect of their alleged use of counterfeits was the ``extremely bad example for thousands of students.'' END!A9?JC-HK-COUNTERFEIT

AP-NY-03-15-95 1946EST

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