Legislative Council Panel on Trade and Industry
Licensing of Retail Outlets of Optical Discs


This paper sets out the considerations involved in deliberations on the proposal to introduce a licensing system for the retail outlets of optical discs in Hong Kong.


2. At the meeting of this Panel on 7 June 1999, Members considered a paper on additional legal tools to combat intellectual property rights infringements. A Member asked the Government to provide more details on the rationale for setting aside the proposal to license retail outlets selling optical discs for the time being.


3. The proposal envisages that all the optical discs in an unlicensed outlet will be subject to seizure without the need to prove the infringing nature of the discs. We accept that it may help to enhance enforcement against one particular form of copyright piracy if the aim is simply to seize the discs. However, we would need to consider a number of issues before we decide to take the proposal forward.

4. We do not have a precise indication of the total number of retail outlets selling optical discs. However, given the popularity of optical discs, it is likely that the number is large. In addition to shops specialising in optical discs such as the regular audiovisual outlets, bookshops, department stores and many other retailers or even newspaper stalls may sell optical discs as part of their normal businesses. To ensure compliance with the law and licensing conditions, a fairly elaborate licensing and inspection system would need to be put in place. This would in turn be resource intensive. Given the need for optimal deployment of available resources against competing demands, there might be a case for higher priority to be given to front-line enforcement duties such as raids at the retail or manufacturing level instead.

5. Another factor to be taken into account is the possible inconvenience and additional operating costs to legitimate retailers under the proposed licensing system. Under the user-pays principle, the cost for operating the licensing system would have to be recouped from the licensees, who would eventually pass the cost to consumers. (For example, the fee for a three-year licence for an optical disc manufacturing plant is $5,500, that for a one-year licence for an amusement games centre with 20 machines is $18,400. In addition, fees are payable for changes of the licence particulars e.g., change of address.) The smaller retailers might in particular find the increase to their overheads and liabilities another burden to their operating cost. Whether retailers of pirated discs will contribute towards the cost of administering the licensing scheme is questionable. It is for consideration if the cost of compliance involved is justified.

6. It should also be noted that a licensing system would facilitate enforcement only to the extent that the possible copyright infringement is not to be looked into. Where the cases have to be investigated as piracy offences, copyright subsistence still needs to be investigated. Generally, it is not the practice to charge a lesser offence amongst other more serious ones just because it is easier to prove. In order to reflect the overall criminality of copyright piracy, it is for consideration if the accused should be charged for both the copyright offence and the proposed licensing offence. If so, however, the more difficult prosecution procedures of the Copyright Ordinance would still need to be followed.

Advice Sought

7. Members are invited to note this paper.

Trade and Industry Bureau
June 1999