Provisional Legislative Council

PLC Paper No. CB(2)1406
(These minutes have been
seen by the Administration)

Ref : CB2/BC/8/97

Bills Committee on
Prevention of Copyright Piracy Bill

Meeting on Friday, 6 March 1998 at 4:00 pm in Conference Room A of the Legislative Council Building

Members Present :

Hon MA Fung-kwok (Chairman)
Mrs Selina CHOW, JP
Hon Henry WU
Dr Hon Ronald ARCULLI, JP
Hon CHAN Yuen-han
Hon CHAN Kam-lam
Hon Howard YOUNG, JP
Hon YEUNG Yiu-chung

Members Absent :

Dr Hon Charles YEUNG Chun-kam (Deputy Chairman)
Hon WONG Siu-yee
Prof Hon NG Ching-fai
Hon Eric LI Ka-cheung, JP
Hon NGAI Shiu-kit, JP
Hon Philip WONG Yu-hong
Hon Kennedy WONG Ying-ho
Hon TAM Yiu-chung, JP
Dr Hon LAW Cheung-kwok

Public Officers Attending :

Miss CHEUNG Siu-hing
Deputy Secretary for Trade and Industry

Miss Elizabeth TSE
Principal Assistant Secretary for Trade and Industry

Deputy Director of Intellectual Property (Acting)

Mr Vincent POON
Assistant Commissioner of Customs and Excise

Senior Assistant Law Draftsman

Mr Johann WONG
Assistant Secretary for Trade and Industry

Clerk in Attendance :

Mrs Percy MA Chief Assistant Secretary (2)3

Staff in Attendance :

Miss Anita HO
Assistant Legal Adviser 2

Miss Flora TAI
Senior Assistant Secretary (2)3

I.Matters arising from the last meeting

(PLC Paper No. CB(2)1167(01))

1. At the invitation of the Chairman, Deputy Secretary for Trade and Industry (DS(TI)) briefed members on the paper on "The Administration ' s Response to Concerns Raised at the Meeting of the Bills Committee on 27 February 1998". The paper was tabled at the meeting and subsequently issued vide PLC Paper No. CB(2)1167 (01). The gist of the discussion is summarized in paragraphs 2-10.

Time limit in clauses 17 and 18

2. On a member ' s proposal that a time limit should be imposed on any machinery or equipment etc. to be sealed, detained, seized or removed under clauses 17 and 18, Acting Deputy Director of Intellectual Property (Ag DD(IP)) explained that in cases where it was not practicable to remove any machinery, equipment or other thing, pursuant to clause 18(2)(b), an authorized officer might seal any of these items or the place where it was kept under clause 18(5). Assistant Commissioner of Customs and Excise (AC(CE)) supplemented that under these circumstances, the machinery, equipment or other thing were meant to be forfeited or used as evidence for subsequent prosecution. DS(TI) stressed that stipulation of a time limit in the legislation as proposed was an inflexible arrangement and might create operational difficulties to Customs officers.

3. Mrs Selina CHOW said that some optical disc manufacturers had grave concern about Customs’ power to seal a manufacturing plant because they would suffer great financial loss if production was disrupted. Mr Ronald ARCULLI remarked that it was essential to provide additional safeguards and re-assurances for optical disc manufacturers to avoid any misuse of Customs’ powers provided under the Bill.

4. In response, Ag DD(IP) said that the acts of Customs officers would have to comply with established procedures in law and the test of "reasonableness". Moreover, the owner could claim the equipment or machinery sealed, seized or detained by applying to the court. DS(TI) pointed out that it was only reasonable for Customs officers to seal an optical disc manufacturing plant if it did not have a licence to manufacturing optical discs. Mrs Selina CHOW said that in the case of a manufacting plant with a valid licence, Customs officers were empowered to seal the whole manufacturing plant under clause 18(5)(b) even if they suspected that an offence was only committed in respect of one of the production lines. Mr Ronald ARCULLI said that members in general would appreciate the operational needs for Customs officers to seal a place under clause 18(5). However, to ensure proper checks and balances, he suggested that an authorized officer might only seal a place for a specified period of time for the purpose of collecting evidence in proceedings; beyond that, the Commissioner of Customs and Excise (the Commissioner) must apply to a court for an order.

5. To allay members’ concerns and making reference to section 16A of the Trade Descriptions Ordinance (Cap. 362), DS(TI) suggested that the Bill be amended to the effect that an authorized officer might only seal a place for a reasonable period of time; beyond that, Customs must have the written consent of the owner. However, Mr Ronald ARCULLI and Mrs Selina CHOW were not satisfied with the Administration ' s suggestion. Mr CHAN Kam-lam also remarked that it would only be fair to the owner concerned if a time limit was specified. In light of members’ views, DS(TI) undertook to revert to members on the Administration ' s position after the meeting. Adm

Delegation of the Commissioner ' s powers in clauses 17 and 18

6. On a member ' s proposal that only senior Customs officers should be delegated the authority to exercise the powers in clauses 17 and 18, DS(TI) said that the Administration did not agree with the proposal because it was considered necessary for the Commissioner to retain suitable discretion over operational matters. She stressed that public officers were required to act in accordance with the procedures stipulated in the Bill which had already provided adequate safeguards.

Compensation for damages

7. On the proposal concerning compensation, members noted that the Administration, in the light of members’ concern, had accepted that section 35 of the Trade Descriptions Ordinance (Cap. 362) could be adopted, with suitable modifications, to make it beyond doubt the liability of the Government to compensate persons aggrieved by actions of authorized officers. The Administration would add new clause 33A to the Bill to effect the proposal.

Licence conditions

8. On the proposal to promulgate the general conditions for granting a licence in the form of a schedule to the Bill, DS(TI) said that it was not practicable or appropriate to specify in the Bill an exhaustive list of conditions that the Commissioner was likely to impose. To address members’ concern about the transparency of the licensing system, the Administration proposed that the Commissioner should publish in the gazette conditions that were generally applicable to all licences to be granted. The Administration would move a Committee stage amendment (CSA) to clause 5 to such an effect.

Fees for application, renewal and transfer of licence

9. Principal Assistant Secretary for Trade and Industry (PAS(TI)) said that the Administration did not agree to some members’ suggestion at previous meetings that the procedure for renewal of a licence should be simplified and the fee for such applications should be reduced. Mrs Selina CHOW queried whether fee for renewal had to be the same as that for a new application in other licensing regimes. PAS(TI) said that the Administration agreed that in many licensing schemes, fees for renewals should be less than those for new applications, but only if the processing involved in the former was less than that for the latter. In processing a licence for the manufacture of optical discs, there were basic steps required for the physical vetting of a licence particulars before the Commissioner renewed a licence or approved a transfer. The $5,500 was necessary to enable the Administration to recover the costs of these basic steps.

10. Mr CHAN Kam-lam considered the proposed fees acceptable. However, Mrs Selina CHOW said that the question involved was a matter of principle. She remained of the view that the processing involved in the renewal of a licence should be less than that for a new application; and thus the fee for renewal should be less than that for a new application. Mr Ronald ARCULLI shared her view.

11. DS(TI) reiterated that as the licensing regime was a new one, the Administration would need time to validate the assumptions used in the calculations. Any adjustments made at this stage would be arbitrary. She proposed that the Administration would give an undertaking, when the Bill resumed Second Reading debate, to review the costs involved in the light of experience, and if necessary, adjust the fees for application, renewal and transfer of licences.

12. The Chairman said that in view of the Administration ' s position on the matter, individual members were at liberty to move amendments to the Bill, if considered necessary. Mrs Selina CHOW said that she would have further discussions with the Administration before deciding on the next course of action.

II.Committee stage amendments to be moved by the Administration

(Annex to PLC Paper No. CB(2)1167(01))

13. Members noted that the Bills Committee had considered and agreed to a number of CSAs to be moved by the Administration at the last meeting. A full set of draft CSAs including additional CSAs to be moved by the Administration was set out in the Annex to PLC Paper No. CB(2)1167(01). The Chairman invited DS(TI) to highlight the additional CSAs for members’ consideration. The gist of the discussion is summarized in the following paragraphs.

Clause 5 Application for and grant of licence

14. Members noted that the Administration would move amendments to clause 5 (b) and (c) to effect the Administration ' s proposal in respect of licence conditions as mentioned in paragraph 8. In this regard, ALA5 pointed out that the word had been omitted after clause 5(b) in the Chinese text. The Administration undertook to make the amendment accordingly. Adm

Clause 18 Power of authorized officers to enter and search, etc.

15. ALA2 drew the Administration ' s attention to the fact that the reference to subclause (4) should read (4)(a) in the Chinese text.

16. Mrs Selina CHOW expressed concern that the phrase "or to be likely to be" in clause 18(2)(b) seemed to give excessive discretionary power to authorized officers. Ag DD(IP) explained that the objective of the Bill was to prevent copyright piracy and therefore it was necessary to empower authorized officers to seize, remove or detain any machinery, equipment or other thing which was likely to contain evidence of an offence under the proposed Ordinance. Moreover, the compensation provision to be included in the Bill would provide additional safeguard. AC(CE) cautioned that an offence was committed under the proposed Ordinance only if an optical disc manufacturer had manufactured optical discs without a valid licence or without marking them with a manufacturer ' s code. Inclusion of the phrase would facilitate the investigation work of Customs officers so that they could seize optical discs without a manufacturer ' s code found in a manufacturing plant even though the manufacturer was not actually seen to be producing these optical discs.

Clause 24 Obstruction of authorized officers

17. Members noted that the Administration would insert the word before in the Chinese text of clause 24(4).

Clause 30 Form of applications, etc.

18. Members noted that the Administration would move a technical amendment to clause 30(4) by deleting "each partner" and substituting "at least one of its partners".

New Clause 33A Compensation for seizure, etc

19. Members noted that new clause 33A would be added to the Bill to the effect that the Government was liable to compensate an owner for any loss suffered by him as a result of Customs’ enforcement actions under clauses 18(2) and (5); and the owner should make such a claim within a period of six months. Ag DD(IP) explained that new clause 33A(1) had set out three exceptional circumstances under which the owner would not be entitled to compensation for any such loss, i.e, the items in questions were forfeited under clauses 20 and 27 or the owner had been convicted of an offence under the proposed Ordinance or the Copyright Ordinance committed in relation to such items. New clause 33A(2) made reference to the circumstances for determining the amount of compensation recoverable which included the conduct and comparative blameworthiness of the parties involved in the case.

20. In response to Mr Henry WU ' s enquiry about the scope of the new clause, DS(TI) explained that new clause 33A would not cover any loss or damage suffered by the owner arising from the acts of authorized officers for breaking into his place in the performance of their duties under the proposed Ordinance, although the Government would still have civil liability under clause 33(4). However, ALA2 cautioned that the owner could only seek compensation from the Government under clause 33(4) if there was proof of wrongful acts of these authorized officers.

21. Mr Ronald ARCULLI observed that there might be inconsistency between the drafting of new clause 33A and clause 33 on the grounds that under the latter, the Commissioner, authorized officers and persons assisting them were exempted from the liability for any loss or damage as a result of their action taken in good faith in the performance of their duties under the proposed Ordinance, and the Government was only liable for the wrongful acts of its servants. Ag DD(IP) responded that clause 33 was a common provision in law enforcement legislation for the protection of public officers but it did not protect the Government, as their employer, from any civil liability. New clause 33A was proposed to dispel any doubt about the liability of the Government and to enhance the transparency of the compensation mechanism. At the member ' s suggestion, ALA2 undertook to discuss the matter with the Administration ' s law draftsman. ALA2

22. At ALA2 ' s suggestion, the Administration would make the following minor amendments to new clause 33A -

    a) to add "during the period when it was detained or sealed" after "is lost or damaged" in the English text of subclause (1);

    b) to add after in line 7 of the Chinese text of subclause (1);

    c) the bracket in subclause (1)(b) should be read as (92 of 1997); and

    d) "blame worthiness" in subclause (2) should be a single word.


III.Legislative timetable

23. Members agreed that the Bill would resume Second Reading debate on 25 March 1998. They noted that the Bills Committee would report to the House Committee on 13 March 1998 and the deadline for giving notice of CSAs was 16 March 1998. At the Chairman ' s request, DS(TI) agreed that the Administration would provide a full set of the final draft of CSAs (in both Chinese and English) by Tuesday, 10 March 1998 for circulation to the Bills Committee ' s members for endorsement.

(Post-meeting note: Members have no comments on the final draft CSAs issued vide PLC Paper No. CB(2) 1177.)


24. There being no other business, the meeting ended at 5:45pm.

Provisional Legislative Council Secretariat
23 March 1998