(a) the Bills Committee had received a letter from Robert W H WANG & Co., the law firm representing HMV, commenting on the submission of Music Publishers Association, and a letter from the European Committee for Interoperable Systems supporting the views of the American Committee for Interoperable Systems (ACIS) on decompilation (LegCo Paper No. CB(1)1506/96-97); and

(b) as of date the Bills Committee had received 107,986 signatures collected by KPS in support of deregulation of parallel imports.

Clause-by-clause examination of the Bill

(LegCo Paper No. CB(1)1379/96-97, and the Administrations paper entitled "Copyright Owners and Exclusive Licensees" and the proposed Committee stage amendments tabled and circulated to members vide LegCo Paper No. CB(1)1545/96-97)

1. Members commenced clause-by-clause examination of the Bill.

Part I - Preliminary (clause 1)

2. Members noted this Part.

Part II - Copyright

Division I - Subsistence, ownership and duration of copyright

Clauses 2 and 3 - Introductory

3. Members noted these clauses.

Clauses 4 to 10 - Descriptions of work and related provisions

Clause 4

4. Miss Margaret NG queried the Chinese translation of "literary works" which, in her view, might restrict the meaning to works of literature only. In response, the Deputy Director of Intellectual Property (DD of IP) explained that the Chinese version of the clause followed the Chinese translation of the Berne Convention. Miss NG requested the Administration to reconsider the Chinese translation of the term.

5. The Chairman requested the Administration to respond to the comments of the Hong Kong Institute of Trade Mark Practitioners (HKITMP) on sub-clause 4 (1)(a) that by requiring the compilation of data to constitute "an intellectual creation" for entitlement to copyright protection, this had departed from the wording of the UK law. In response, DD of IP explained that the adoption of this new definition was in compliance with the international trend to require a higher standard of originality for award of copyright protection. Internationally two kinds of protection were awarded for literary works, namely, copyright protection for works with a certain standard of originality and a shorter duration of copyright protection for works which had a lower standard of originality, such as a telephone directory.

Clause 9

6. In reply to a members question, DD of IP clarified that clause 9 covered micro-wave transmission.

Clauses 11 to 16 - Authorship and ownership of copyright

Clause 11

7. In response to members queries, DD of IP and the Deputy Principal Crown Counsel (DPCC) explained that on account of an international consensus to award copyright to the natural person who created a computer-generated work, the expression "the person by whom the arrangements necessary for the creation of the work are undertaken" was adopted in subclause (3) to ensure that only the person who had actually made efforts to bring about the creation of the work would be awarded copyright. The expression, first used in the UK, was presently used worldwide.

Clause 14

8. The Chairman referred the Administration to HKITMPs comments that the statutory award provisions for employee works were unclear as to the factors with regard to which the court would assess the "award" and should be amended to allow the parties to contract out. In response, DD of IP emphasised that the present arrangement was reasonable and fair because it recognised the employee as the author of the copyright work and provided a mechanism for resolving copyright ownership disputes in the Copyright Tribunal, which would consider the merits of each case independently if there was no agreement between the employer and the employee.

Clause 15

9. In reply to a members question, DD of IP confirmed that to avoid disputes, there was a need to specify copyright ownership in the commission contract.

10. Members noted the Administrations proposed Committee stage amendments (CSAs).

Clauses 17 to 21 - Duration of copyright

Clause 19

11. Members noted the proposed CSA. The Deputy Secretary for Trade and Industry (DS/T&I) advised that in view of the Registered Designs Bill, clause 21A would be added to the Bill to stipulate that "registrable" but unregistered designs should enjoy copyright protection for 15 years from the date of the first industrial application of such a design. DD of IP explained that as registered designs would be protected for 25 years, the new clause would encourage registration. DPCC advised that the numbering of the new clause would change upon enactment of the Ordinance.

Division II - Rights of copyright owner

Clauses 22 to 29 - The acts restricted by copyright

Clause 22

12. Addressing the Chairmans question, DD of IP explained that as intellectual property rights were originated from statute laws, only acts listed under the clause were restricted acts in a copyright work.

Clause 29

13. In reply to a members question, DD of IP pointed out that the purpose of subclause (5) was to distinguish between copying and making adaptation. He referred members to clause 23 for acts that amounted to copying.

Clauses 30 to 34 - Secondary infringement of copyright

Clause 30

14. Members discussed the expression "has reason to believe". Some members questioned whether the threshold for taking action should be lowered to when an importer had reason to believe that he was dealing in an infringing copy. Liability, whether criminal or civil, should be subject to proof of actual knowledge of the infringing activities. Some members were concerned that the burden of proof had been shifted from the plaintiff (who previously had to prove actual knowledge) onto the defendant who might have to establish that he did not have "reason to believe".

15. In response, DD of IP made the following points -

(a) The use of the expression would overcome difficulties in proving actual knowledge of the defendant. By lowering the level of "knowledge test" to having reason to believe, the burden of proof would be less onerous on the copyright owner and the exclusive licensee. Nonetheless, the plaintiff still had to produce sufficient proof to pass this knowledge test and the innocence would not be unjustly convicted easily.

(b) If the importer had grounds to suspect on the basis of information but failed to appreciate the significance, he might not be held liable. He would only be held liable if he appreciated the significance and continued with the infringing act. Notification by the copyright owner or the exclusive licensee might not be sufficient proof for having "reason to believe".

(c) An infringer would not be immune from liability simply by declining to make enquiries on the status of the product. Precedent cases in the UK showed that if an infringer turned a blind eye to the legality of a product, he could be taken to have "reason to believe" or even "knowledge" of the infringement.

16. To put members into perspective of the effect of clause 30 in relation to other parts of the Bill, the Administration clarified that clauses 22 to 29 dealt with primary infringement of copyright and clauses 30 to 34 secondary infringement. Secondary infringement as stated in clause 30 was a civil offence. Only actions listed under clause 115(1) attracted criminal sanctions.

17. Members agreed to consider this clause later.

Clause 33

18. In reply to members question, DS/T&I said that the Administration was still discussing with relevant parties on the proposal to expand the scope of clause 33 to make landlords civilly liable for knowingly permitting the use of their premises for infringing acts and would report to the Bills Committee later.

19. DS/T&I advised that a CSA would be introduced to subclause (1) to clarify that unauthorised public performance of any categories of copyright works was a copyright infringement.

Clause 35 - Infringing copy

20. Members noted that the Administration had yet to make a decision on the issue of parallel importation of non-copyright goods depicting copyright labels.

21. In reply to members questions on the arrangement of definitions in the Bill, DPCC advised that indexes of defined expressions used in the Bill were in clauses 194 and 234. Clause 1(3) directed readers to these indexes. With the help of the two indexes, readers could locate the defined expressions. Members opined that to make the Bill more user-friendly, all definition provisions should be grouped under one clause. In response, DPCC stressed the need to retain the present format, which was in line with that of the Copyright, Designs and Patents Act 1988 (CDPA). Although this format would be a precedent in Hong Kong laws, it was regarded as the best in the UK law. To enhance readability, some members proposed that footnotes directing readers to the relevant interpretation provision should be inserted where appropriate.

22. Members noted that subject to the views of the Bills Committee, the Administration would introduce a CSA to subclause (4) to maintain criminal sanctions for parallel importation of copyright articles during the first 12 months after the work was published or released anywhere in the world. DS/T&I reported that the Administration had discussed with the Motion Picture Association (MPA), the Hong Kong, Kowloon and New Territories Motion Picture Industry Association and other representatives of the film sector. While these associations had no comments on the proposal to clarify the procedural right of the exclusive licensee, they considered a 12-month criminal sanction period insufficient. They proposed that the 12-month period be either counted on each format of release, or extended to two and a half years. Some persons even suggested five years. In the light of the sequential release system of films, the Administration was of the view that the proposed period was a right balance as protection against parallel imports was most crucial for theatrical and home video release. In any case, civil remedies would continue to be available throughout the copyright term.

23. Members agreed that the Bills Committee should consider the views of relevant trades before making a decision on the Administrations proposal.

24. Members also noted the Administrations proposed CSA to subclause (7) to clarify that "lawfully made" did not include the making of a copy of a copyright work at a place where the term of protection had expired.

Division III - Acts permitted in relation to copyright works

Clause 36 - Introductory

25. Members noted this clause.

Clauses 37 to 39- General

Clause 37

26. The Administration explained its proposed CSAs to delete subclause (3), which excluded decompilation of computer programs from "fair dealing" and to add a new subclause to clause 37 to expand its scope to accommodate decompilation by reason of fair use. The Administration assured members that the proposed new subclause would be drafted in such a way to provide a limited exception for adapting or copying of a computer program for research or private study.

Clause 38

27. The Chairman referred the Administration to the comments of TVB, ATV, Cable and STAR TV that fair dealing of a work for the purpose of reporting current events should not include the use of films and broadcasts. In response, DS/T&I and DD of IP emphasised that the Administration had carefully considered the comments but maintained that to strike a fair balance among competing interests, such a fair dealing exception should remain. It had also considered the proposal to acknowledge sources of material in connection with the reporting of current events impracticable as the acknowledgement could be lengthy. Development in common law also supported the retention of such a fair dealing exception.

28. Members noted the Administrations proposed CSA to subclause (1) to clarify that "fair dealing" for the purposes of criticism, review and news reporting was applicable to published editions.

Clauses 40 to 44 - Education

Clause 44

29. Members noted the Administrations proposed CSA to subclause (1) to clarify that "reasonable extent" of copying should not unfairly prejudice the legitimate interests of the copyright owner. In reply to members questions, DD of IP supplemented that whether the copyright owner would suffer financial loss as a result of the copying act would be a factor for determining "reasonable extent" .

Clauses 45 to 52 - Libraries and archives

Clause 49

30. DD of IP explained that the CSA to subclause (1) was necessary to ensure that copyright exception would apply to all works and not just some of the works. Members noted the amendment.

Clause 51

31. Members noted the Administrations proposed CSA to subclause (2)(a).

32. A member was concerned whether permitted acts as regards libraries and archives would apply to the Legislative Council (LegCo), which made copies of newspaper clippings for record and research purposes. In response, DD of IP advised that such an act would be permitted if it was for the purpose of private research or education. In any case, if the act was not covered under permitted acts, he envisaged little difficulties in obtaining permission from the copyright owner.

Clauses 53 to 58 - Public administration

33. Members noted these clauses.

Clauses 59 to 61 - Computer programs: lawful users

Clause 59

34. A member expressed concern over subclause (3) which might render clause 59 useless as any making of back-up copies would be subject to contractual restrictions. The Director of Intellectual Property advised that licensing agreements that specifically prohibited the making of back-up copies were most uncommon. Normally, such agreements would only list out permissible acts. DD of IP supplemented that the purpose of subclause (3) was to reaffirm the copyright owners exclusive right in exploiting his work.

Clause 60

35. Members noted the Administrations proposed CSA to delete the clause to remove copyright exception for decompilation of computer programs.

36. The Chairman reminded members that the next meeting of the Bills Committee would be held on Tuesday, 13 May 1997, at 4:30 pm.

37. The meeting ended at 4:30 pm.

Provisional Legislative Council Secretariat
23 July 1997

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Bills Committee on Copyright Bill

Minutes of meeting held on Thursday, 8 May 1997, at 2:30 pm in the Chamber of the Legislative Council Building