A New Chapter? Hong Kong Proposes Introducing Copyright Exception for Text and Data Mining

On 8 July 2024, Hong Kong's Commerce and Economic Development Bureau (“CEDB”), along with the Intellectual Property Department (“IPD”), released a public consultation paper on copyright and artificial intelligence (AI) (“Consultation Paper”).¹ The consultation period lasted for two months and concluded on 8 September 2024.

The Consultation Paper aims to ensure that the Copyright Ordinance (Cap. 528) (“CO”) remains robust and competitive in light of the fast-paced advancements in AI technology. In particular, the CEDB and the IPD explore the possibility of introducing a new copyright exception for text and data mining activities (“TDM Exception”), applicable to both non-commercial and commercial uses.²

Introduction

Text and data mining (“TDM”) typically refers to the use of computational techniques to analyse large amounts of data and information to uncover intricate patterns and trends, valuable insights, and other useful information that may be challenging for humans to detect.³ With the advent of the AI era, TDM is widely used for the development, training, and enhancement of AI models based on extensive data sets.⁴

One issue is whether using such data may amount to copyright infringement. In the past few years, a spate of ongoing disputes has sparked a conversation about whether the use of copyrighted works (for example, articles, photos, and recorded voices) to train AI models should require a permit or licence from copyright owners. There is a growing debate on whether (and to what extent) the doctrine of fair use under national copyright laws should apply in this context. Relatedly, many question whether reforms to copyright regimes are necessary to provide greater clarity and certainty on exceptions for TDM.

As highlighted in the Consultation Paper, some jurisdictions (for example, Japan, Singapore, EU, and UK) have some copyright exemption already in place for TDM activities, although these vary in scope and conditions.⁵ In terms of the current copyright regime in Hong Kong, there is no specific copyright exception for computational data analysis and processing.⁶ However, seeking to foster the growth of the AI industry in Hong Kong, the Consultation Paper explores adopting a similar inclusive approach and potentially introducing a new copyright exception to permit the reasonable use of copyrighted works in TDM activities, whether for non-commercial or commercial purposes.

Extended to Non-commercial and Commercial uses

In contrast to the EU, Japan and Singapore, the UK's TDM exceptions are limited to non-commercial uses.⁷ Interestingly, the UK’s proposal to expand TDM exceptions to cover commercial uses was shelved in 2023 following concerns raised by copyright owners.⁸

The reality is that TDM is currently used for a wide range of commercial purposes, such as developing AI models for market research, market analysis, and privately funded R&D projects. Recognising that a narrow TDM exception may inhibit commercial endeavours and further technological advancements, the Consultation Paper proposes that the TDM Exception apply to both commercial and non-commercial uses.⁹

One of the major objections to applying the TDM Exception for commercial use is that it could unduly diminish the ability of copyright owners to exploit their works.¹⁰ Additionally, established market practices, such as contractual agreements for the use of copyrighted works in TDM activities, may be negatively impacted.¹¹

Opt-out and Other Conditions

That said, bearing in mind the experience of other jurisdictions, the Consultation Paper notes that these potential drawbacks can be mitigated by implementing suitable safeguards for copyright owners. The Consultation Paper sets out some conditions for TDM exceptions to effectively balance the interests of copyright owners and TDM users. The proposed conditions include:¹²

• Requiring lawful access to copyright works;
• Rendering TDM activities unauthorised if licensing schemes are available, or copyright owners have expressly reserved their rights (i.e., an opt-out option);
• Imposing restrictions on further distribution of the copy made under the proposed TDM Exception; and
• Other conditions such as sufficient acknowledgment, secured storage, retention for limited purposes, destruction after a certain period or upon request, etc.

Future Challenges

The tension remains between copyright owners as recognised rights holders and AI businesses seeking to push the boundaries of technology. In these circumstances, a compromise may be necessary to balance the interests of all stakeholders and create a net positive effect for society at large. For Hong Kong, the starting point may be a deliberately broad TDM Exception extending to commercial purposes, which can then be balanced against copyright owners retaining the right to opt out.

Yet, there are still unresolved concerns regarding the practical implementation of the opt-out mechanism. For example, from the perspective of copyright owners: How (whether by contractual agreements or a unilateral declaration) should copyright owners exercise their right to opt out? When should they do so, and what if the exercise of such right comes after use of the copyrighted work by AI businesses? How can the period of permitted retention be determined if copyright owners have expressly reserved their rights? From the perspective of AI businesses: How can the works of copyrighted owners who have exercised their right to opt out be reliably detected and excluded from TDM activities?

Remarkably, some of these concerns have been reflected in the Consultation Paper. The CEDB and IPD have sought input from the public on the appropriate conditions for TDM exceptions to be imposed, including on the effectiveness of licensing deals as a solution for copyright concerns and practical difficulties in compliance with the proposed conditions.¹³

Conclusion

The launch of the public discussion on copyright and AI marks a significant stride forward in promoting the development of AI, fostering innovation, and advancing technology in Hong Kong. The Consultation Paper aims to provide a way forward and strike a fair balance between safeguarding the rights of copyright owners and enabling reasonable utilization of TDM technology.

While the Consultation Paper sheds some light on the future interaction of AI and copyright in Hong Kong, there are still outstanding practical issues that remain unresolved. Companies and stakeholders should keep an eye out for further developments in the possible draft Bill for the new TDM copyright exception in the future.

The authors would like to thank Roslie Liu, Intellectual Property Officer at Mayer Brown, for her assistance with this article.

 

 

¹ See the Consultation Paper: https://www.ipd.gov.hk/filemanager/ipd/en/share/consultation-papers/Eng-Copyright-and-AI-Consultation-Paper-20240708.pdf
² Consultation Paper, paragraphs 4.15 and 4.16
³ Consultation Paper, paragraph 4.2
⁴ Ibid.
⁵ Consultation Paper, paragraphs 4.8 and 4.9
⁶ Consultation Paper, paragraph 4.5
⁷ Consultation Paper, paragraph 4.9
⁸ Consultation Paper, paragraph 4.10(b)
⁹ Consultation Paper, paragraph 4.16
¹⁰ Consultation Paper, paragraph 4.14
¹¹ Ibid.
¹² Consultation Paper, paragraph 4.17
¹³ Consultation Paper, paragraph 4.18