Provisional Legislative Council

PLC Paper No. CB(2)1346
(These minutes have been
seen by the Administration)

Ref : CB2/BC/8/97

Bills Committee on
Prevention of Copyright Piracy Bill

Meeting on Wednesday, 11 February 1998 at 8:30 am in Conference Room A of the Legislative Council Building

Members Present :

Hon MA Fung-kwok (Chairman)
Dr Hon Charles YEUNG Chun-kam (Deputy Chairman)
Prof Hon NG Ching-fai
Hon NGAI Shiu-kit, JP
Hon CHAN Kam-lam
Dr Hon Philip WONG Yu-hong
Hon Kennedy WONG Ying-ho
Hon YEUNG Yiu-chung
Dr Hon LAW Cheung-kwok
Hon TAM Yiu-chung, JP

Members Absent :

Hon WONG Siu-yee
Hon James TIEN Pei-chun, JP
Hon Eric LI Ka-cheung, JP
Hon Henry WU
Mrs Selina CHOW, JP
Hon Ronald ARCULLI, JP
Hon CHAN Yuen-han
Hon Howard YOUNG, JP

Public Officers Attending :

Miss CHEUNG Siu-hing
Deputy Secretary for Trade and Industry

Mr Stephen Selby, JP
Director of Intellectual Property

Assistant Director of Intellectual Property

Mr Vincent POON
Assistant Commissioner of Customs and Excise

Mr Jeffrey GUNTER
Deputy Principal Government Counsel

Miss Elizabeth TSE
Principal 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. Election of Chairman and Deputy Chairman

Mr Philip WONG was elected as the presiding Member for the election of Chairman. Mr MA Fung-kwok was nominated by Professor NG Ching-fai and seconded by Mr YEUNG Yiu-chung. Mr MA Fung-kwok accepted the nomination. There being no other nomination, the presiding member declared Mr MA Fung-kwok elected as Chairman of the Bills Committee. Mr MA then took over the chair of the meeting.

2. Dr Charles YEUNG was nominated for Deputy Chairman by Professor NG Ching-fai and seconded by Mr YEUNG Yiu-chung. Dr Charles YEUNG accepted the nomination. There being no other nominations, the Chairman declared Dr Charles YEUNG elected as Deputy Chairman of the Bills Committee.

II.Meeting with the Administration

(Provisional Legislative Council Brief File Ref : TIB 09/46/21)

3. At the invitation of the Chairman, Deputy Secretary for Trade and Industry (DS(TI) explained the background of the Bill to members. She said that the purposes of the Bill were to introduce a licensing scheme for the manufacture of optical discs in Hong Kong and to require optical discs produced in Hong Kong (but not imported ones) to be permanently embossed with a code indicating their source of manufacture. The ultimate objective was to eliminate and prevent copyright piracy at source. DS(TI) stressed that the new system was designed to create minimum disruption for legitimate optical disc manufacturers.

4. Assistant Director of Intellectual Property briefed members on the Bill which mainly covered the following four parts as set out in the Provisional Legislative Council Brief -

  1. icensing requirement for manufacture of optical discs;

  2. mandatory requirement for a manufacturer's code;

  3. inspection and enforcement; and

  4. offences and penalties.

5. The Chairman then invited views from members on the general principles of the Bill and asked the Administration to respond accordingly. The gist of the discussion is summarized in the following paragraphs.

Manufacturer's code to be approved by the Commissioner of Customs and Excise (the Commissioner)

6. The Chairman sought the Administration's view on a proposal of the industry that the Commissioner should be empowered to assign, instead of approve, manufacturer's codes. DS(TI) said that the Administration understood that the industry had different views on the matter. It was the intention of the Administration that flexibility should be allowed for optical disc manufacturers who would prefer to use their existing codes, particularly in view of the fact that there was at present no one single coding system which was accepted as the international standard. However, the Commissioner was empowered to impose any conditions in respect of the use of codes to be approved by him and he would keep a register of all the codes approved for public inspection to avoid confusion.

Requirement to furnish information to the Commissioner

7. Mr Philip WONG said that he was supportive of the Administration's proposals in the Bill to combat copyright piracy. However, he was concerned that an illegitimate optical disc manufacturer might manufacture optical discs embossed with a manufacturer's code in excess of quantity specified in the order placed by the copyright owner so that the surplus products could be put on sale unlawfully. DS(TI) pointed out that the optical disc manufacturer would have committed both civil and criminal offences in such a case.

8. To further monitor copyright infringing activities, Mr Philip WONG suggested that the Bill should impose a legal requirement on optical disc manufacturers to keep records on the quantity of optical discs manufactured and sold to retailers respectively so that Custom officers could reconcile the records and detect any unlawful production. In response, DS(TI) explained that one of the objectives of the Copyright Ordinance was to eliminate copyright infringement activities at retail level whereas the Bill was proposed to prevent copyright piracy at source. It was the Administration's intention not to impose too many constraints on optical disc manufacturers in order not to disrupt the operation of legitimate business. She added that the conditions to be imposed by the Commissioner for the grant of a licence for manufacture of optical discs could require a licensee to keep authorizations issued by copyright owners placing orders for optical discs. In this regard, the Chairman said that in the case of an optical disc manufacturer who manufactured optical discs for export as well as local market, or who distributed the discs for retailing at different outlets, it would be technically difficult to enforce such a legal requirement. Mr NGAI Shiu-kit shared a similar view.

Applying false manufacturer's code

9. DS(TI) informed members that forging of a manufacturer's code was an offence under the Bill. Mr Philip WONG asked how Customs officers could differentiate between genuine and pirated optical discs if they were identical in appearance and borne the same manufacturer's code. Assistant Commissioner of Customs and Excise responded that Customs officers would not be able to verify simply on the basis of the manufacturer's code. They had to invite the copyright owner concerned to verify by checking the substance of the optical discs.

Transfer of licence

10. Dr LAW Cheung-kwok queried why a licence for manufacture of optical discs was not transferable unless with the approval of the Commissioner. DS(TI) said that the Administration considered it necessary to have control over the transfer of licence. The purpose of the Bill would be defeated if a licence could be transferred, without the approval of the Commissioner, to a person who did not comply with the stipulated licence conditions. Deputy Principal Government Counsel added that a licence normally was not transferable. The transfer of licence provided for in the Bill was to facilitate the operation of business so that a new owner of a manufacturing factory would not need to apply for a new licence.

Administrative Appeal Board

11. In response to Mr Philip WONG's enquiry, Director of Intellectual Property explained that the Administrative Appeal Board was formed to hear administrative appeals. It was a statutory body comprising, inter alia, two District Court judges.

Economic implications of the Bill

12. In response to Dr LAW Cheung-kwok's enquiry about the economic implications of the Bill, DS(TI) said that the Administration had not conducted any quantitative assessment on the economic implications of the Bill. However, it was understood that the Bill would have positive impact on economy as the proposed licensing system would reinforce the protection of intellectual property rights and encourage foreign investment by upholding Hong Kong's reputation as a responsible trading partner.

III.Written Submissions on the Bill

13. Members noted that the Administration had issued the draft Bill as well as a consultation paper to about 80 organizations for their comments, and briefed the Trade and Industry Panel of the Provisional Legislative Council on the Bill. However, members were of the view that interested organisations or groups should be given the opportunity to give their views on the Bill, if any. Members agreed that the Bills Committee should invite written submissions/oral representations on the Bill by writing to the organisations, which had been consulted by the Administration, and placing advertisements in newspapers.

(Post-meeting note : The Clerk issued letters to 68 organizations on 12 February 1998 and placed advertisements in two local newspapers on 13 February 1998.)

IV. Date of Future Meetings

14. Members agreed to schedule the following meetings -

  1. Thursday, 19 February 1998 from 10:45 am to 12:45 pm to meet deputations and the Administration;

  2. Monday, 23 February 1998 from 8:30 am to 10:45 am to meet the Administration; and

  3. Tuesday, 24 February 1998 from 8:30 am to 12:45 pm to meet the Administration.

(Post-meeting note : At the request of the Administration and with the concurrence of the Chairman, the meeting on 24 February 1998 has been re-scheduled for Wednesday, 25 February from 8:30 am to 12:45 pm.)

15. There being no other business, the meeting ended at 9:50 am.

Provisional Legislative Council Secretariat
18 March 1998