8. Are parallel imports (or grey-market goods) legal under the Copyright Ordinance?

8. Are parallel imports (or grey-market goods) legal under the Copyright Ordinance?

Parallel imports are goods (e.g. copies of works) which are lawfully made outside Hong Kong , but are imported into Hong Kong without the express consent of the copyright owner. By virtue of section 35(3) of the Copyright Ordinance, parallel imports are infringing except in the following two situations:

1. The copyright owner has not appointed any exclusive licensee to make the goods in Hong Kong , nor in the place where the parallel imports are made.
2. The copyright owner has appointed the same exclusive licensee to make the goods in Hong Kong and in the place where the parallel imports are actually made.

The term "exclusive licensee" refers to a licensee who is entitled to exercise the rights granted under a licence to the exclusion of all other persons, including the copyright owner (see section 103 of the Copyright Ordinance). Thus if there is an exclusive licensee to make copies of a work in Hong Kong, nobody else (including the copyright owner) is entitled to makes copies of that work in Hong Kong.

The effect of section 35(3) of the Copyright Ordinance is that if the copyright owner has appointed an exclusive licensee to make the goods in Hong Kong but no exclusive licensee in the place where the parallel imports are made, or vice versa, the parallel imports will be regarded as copyright infringing in Hong Kong. Alternatively, if the exclusive licensee appointed to make the goods in Hong Kong is not the same as the exclusive licensee in the place where the parallel imports are made, the parallel imports will also be regarded as copyright infringing in Hong Kong.

However, section 35(3) of the Copyright Ordinance does not apply to computer software parallel-imported into Hong Kong after 28 November 2003 . This is due to section 35A of the Copyright Ordinance, which came into effect on 28 November 2003 and which expressly states that parallel-imported computer software is not regarded as copyright infringing for the purpose of section 35(3).