Provisional Legislative Council

PLC Paper No. CB(2)1398
(These minutes have been
seen by the Administration)

Ref : CB2/BC/8/97

Bills Committee on
Prevention of Copyright Piracy Bill

Meeting on Thursday, 19 February 1998 at 10:45 am in the Chamber of the Legislative Council Building

Members Present :

Hon MA Fung-kwok (Chairman)
Dr Hon Charles YEUNG Chun-kam (Deputy Chairman)
Mrs Selina CHOW, JP
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
Prof Hon NG Ching-fai
Hon Eric LI Ka-cheung, JP
Hon Henry WU
Hon Ronald ARCULLI, JP
Hon CHAN Yuen-han
Hon Howard YOUNG, JP

Public Officers Attending :

Miss Elizabeth TSE
Principal Assistant Secretary for Trade and Industry

Assistant Director of Intellectual Property

Mr Vincent POON
Assistant Commissioner of Customs and Excise

Mr Jeffrey GUNTER
Deputy Principal Government Counsel

Mr Johann WONG
Assistant Secretary for Trade and Industry

Attendance by Invitation :

KPS Retail Stores Limited
Mr Christopher BRITTON

Business Software Alliance
Mr Robert ARNOLD
Miss Winnie YEUNG

HK, Kln & NT Motion Picture Industry Association
Mr Woody TSUNG

HK Optical Disc Manufacturers Association
Mr Ivan LAM
Mr Keith MO
Mr Eddie CHUNG

International Federation of the Phonographic Industry
Mr GIOUW Jui-chian
Mr Ricky FUNG
Mr Patrick WONG

Motion Picture Association
Mr CHING Siu-keung
Mr Jared Richard MARGOLIS

Law Society of Hong Kong
Ms Anita LEUNG

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.Membership of the Bills Committee

1. Members noted that Hon James TIEN Pei-chun had tendered his resignation as member of the Bills Committee on 17 February 1998.

II. Written submissions on the Bill

2. The Chairman informed members that the Clerk had issued letters to 68 organizations (which had submitted written submission on the draft Bill) on 12 February 1998 and placed advertisements on Ming Pao and South China Morning Post on 13 February 1998 to invite oral and written representations on the Bill.

III.Meeting with deputations

KPS Retail Stores Limited

(PLC Paper Nos. CB(2)1031(01) and CB(2)1059(02))

3. At the invitation of the Chairman, Mr Christopher BRITTON briefed members on the submission from KPS Retail Stores Limited (PLC Paper No. CB(2)1031(01)) and his note. The note was tabled at the meeting and subsequently issued vide PLC Paper No. CB(2)1059(02). Members noted that the organization fully supported the Bill.

International Federation of the Phonographic Industry (IFPI)

(PLC Paper Nos. CB(2)1031(02) and CB(2)1031(03))

3. At the invitation of the Chairman, Mr GIOUW Jui-chian briefed members on the joint submission from Business Software Alliance, Kowloon, Hong Kong & New Territories Motion Picture Industry Association, Hong Kong Optical Manufacturers Association, IFPI and Motion Picture Association which had been issued vide PLC Paper No. CB(2)1031(03). Members noted that the deputations proposed, inter alia, that clauses 15 and 16 of the Bill should be amended to the effect that the Commissioner of Customs and Excise (the Commissioner) should assign, instead of approve, manufacturer’s codes in order to avoid creating confusions in the local and international markets. Members also noted a separate submission from IFPI (issued vide PLC Paper No. CB(2)1031(02)) which suggested that the IFPI’s source identitication coding system (SID codes) which had been widely recognised could be adopted as the source coding system. Mr GIOUW stressed that IFPI’s involvement in the SID codes was strictly administrative and non-commercial.

4. Mrs Selina CHOW asked and Mr GIOUW responded that SID codes were being used by 90% of IFPI’s known optical disc manufacturers in Hong Kong although some manufacturers had developed their own coding systems. In this regard, Mr Ivan LAM remarked that it was beyond doubt that the SID codes were widely used in the industry and were recognised internationally. However, Principal Assistant Secretary for Trade and Industry (PAS(TI)) pointed out that as far as the Administration was aware, there was at present no coding system which was accepted as the international standard. There was no other overseas countries or regions apart from Mainland China and Taiwan where a mandatory coding requirement for optical discs had been adopted.

5. Mrs Selina CHOW expressed concern about the possibility of monopolization in the industry if a mandatory coding system managed by a private organization was adopted. Making reference to the arrangement worked out with the Government of Mainland China, Mr GIOUW informed the meeting that IFPI had allotted a set of codes for use in Mainland China with no charge and had undertaken to allocate further sets of codes on the same conditions upon request. He said that similar agreement could be reached with the Hong Kong Government. Mr GIOUW added that such an agreement would not impose any obligations on the part of the Government or the prospective licensees. In response to members, he clarified that the SID codes were developed jointly by IFPI and Philips Consumer Electronics which was the patent owner of compact discs technology. It was therefore necessary for optical disc manufacturers to pay royalties to Philips Consumer Electronics for the manufacture of optical discs, but no charge would be imposed for the use of the SID codes.

6. Mr CHAN Kam-lam asked and Mr GIOUW responded that it was not technically difficult to imitate a manufacturer’s code, although it had rarely happened. Mr CHAN pointed out that an unscrupulous optical disc manufacturer might manufacture optical discs embossed with a manufacturer’s code in excess of the quantity specified in the order placed by the copyright owner. He was concerned whether one could tell the extra discs manufactured were infringing copies. In this regard, the Chairman advised that the copyright owner would normally place order with a separate manufacturer for the packaging of the discs. In the circumstance described by Mr CHAN, the package of the pirated optical discs would be different. Mr GIOUW added that the requirement of manufacturer’s codes would facilitate the tracking of the source of manufacture. Moreover, the Bill empowered Customs officers to inspect optical disc manufacturing factories to ensure that the production of optical discs in these factories was lawful.

Hong Kong, Kowloon and New Territories Motion Picture Industry Association (MPIA)

(PLC Paper No. CB(2)1031(03))

7. Mr Woody TSUNG expressed concern that there would be enforcement difficulties if imported optical discs were not required to be embossed with a manufacturer’s code. He also suggested that the Government should set up a registry of copyright which could facilitate verification of copyright ownership by the industry and enforcement of Customs officers. In this regard, Mr TSUNG informed members that some associations in the industry such as the MPIA maintained a register of copyright ownership for reference of their members and would answer relevant enquiries. However, it was important to have a centrally administered registry for the different patent products in the industry.

Hong Kong Optical Disc Manufacturers Association (the Association)

(PLC Paper Nos. CB(2)1031(03) and CB(2)1053(03))

8. Mr Ivan LAM briefed members on the Association’s submission which had been issued vide PLC Paper No. CB(2)1053(03). The Chinese translation of the submission was tabled at the meeting and subsequently issued vide PLC Paper No. CB(2)1059. The Association made specific proposals concerning the manufacturer’s code, imported optical discs, factors for consideration in revocation or non-renewal of a licence and registry of copyright.

9. In response to Dr Charles YEUNG’s enquiry, Mr LAM said that if a comprehensive registry of copyright was not in place, optical disc manufacturers would have to go through a very complicated and time-consuming verification process every time when an order was placed.

Business Software Alliance

(PLC Paper Nos. CB(2)1031(03) and CB(2)1041(01))

10. Mr Robert ARNOLD briefed members on the submission from Business Software Alliance which had been issued vide PLC Paper No. CB(2)1041(01). Members noted that the organization supported the Bill.

Law Society of Hong Kong

(PLC Paper Nos. CB(2)1053(01) and CB(2)1059(03))

11. Mr Henry WHEARE briefed members on the note provided by the Law Society of Hong Kong setting out its comments on the Bill. The note was tabled at the meeting and subsequently issued vide PLC Paper No. CB(2)1059(03). Members noted that while supporting the Bill, the Law Society had also made comments on various aspects of the Bill including its failure to cover imported optical discs.

IV. Meeting with the Administration

(PLC Paper No. CB(2)1059(01))

Manufacturer’s code

12. PAS(TI) briefed members on the Administration’s paper (English version) on "The Use of Manufacturer’s Code" which was tabled at the meeting and subsequently issued vide PLC Paper No. CB(2)1059(01). She said that the Administration welcomed the support of the industry for the introduction of a mandatory source coding requirement of optical discs manufactured in Hong Kong. It was the intention of the Administration that the new initiatives should create minimal disruption to existing businesses. She pointed out that the Bill as drafted would not prejudice any existing codes advocated by the IFPI or indeed any other organizations. The Commissioner would require a manufacturer to pledge that the code he applied for was unique to both his plant and Hong Kong. PAS(TI) stressed that the purpose of the mandatory coding requirement for optical discs was to identify the source of manufacture and it was not necessary to have a uniformed coding system. Moreover, some local manufacturing firms had expressed reservation adopting the IFPI’s SID codes. The Administration considered it appropriate to leave some flexibility to allow the market players to decide what was the best for them.

13. While Mrs Selina CHOW agreed with the principle of providing flexibility for the industry, she said that the ultimate objective was to protect the integrity of the coding system and asked how this could be achieved if the codes were to be "approved", instead of "assigned", by the Commissioner. The Chairman shared a similar concern. Mrs CHOW also asked about the standards to be determined by the Commissioner in the marking of the manufacturer’s codes on optical discs. PAS(TI) responded that the coding system would be transparent because the Commissioner would maintain a register of the manufacturer’s codes approved for public inspection.

14. Referring to the Administration’s advice that some manufacturers had reservation about the IFPI’s codes, Mrs Selina CHOW said that it would be desirable for the Bills Committee to listen to their views before proceeding further. After discussion, members agreed that the Chairman should hold a press briefing to appeal to parties who had views on the SID codes of the IFPI to make representations and/or to meet with the Bills Committee and that the Clerk should try to contact those manufacturers referred to by the Administration for the same purpose. Members also agreed that if necessary, the meeting with these organizations could be held in camera.

Registry of copyright

15. PAS(TI) informed members that the Administration was exploring the feasibility of setting up a comprehensive registry of copyright. The Administration had raised the proposal at a meeting with representatives of the industry a few weeks ago, and they were requested to advise on the information which they would make available for inclusion in the database.

Forfeiture of equipment

16. In response to Mrs Selina CHOW’s enquiry, Assistant Director of Intellectual Property confirmed that "any other thing" in clause 27(b) covered "equipment" used in connection with any offence under the proposed Ordinance. Mrs CHOW suggested and PAS(TI) undertook to consider whether this should be made specific in the relevant provision.

Fees for the application, renewal or transfer of a licence

17. Mrs Selina CHOW asked about the basis for setting the fees for an application for licence/renewal of licence/transfer of licence to manufacture optical discs at $5,500. The Chairman suggested the Administration to respond to Mrs CHOW’s question at the next meeting. Adm

V. Dates of future meetings

18. The Chairman reminded members that the next meeting would be held on Monday, 23 February 1998 at 8:30 am. and that the meeting originally scheduled for Tuesday, 24 February 1998 had been re-scheduled for Wednesday, 25 February 1998 from 8:30 am to 12:45 pm. Adm

19. The meeting ended at 12:30 pm.

Provisional Legislative Council Secretariat
24 March 1998