(a) a submission from the International Federation of Phonographic Industry (Hong Kong Group) advising that Australia had discussed the subject of labels and packaging of imported goods in the context of the Australian Copyright Amendment Bill 1996 (LegCo Paper No. CB(1)1595/96-97(01));

(b) a letter from students of English School Foundation schools attaching 1,167 signatures calling for deregulation of parallel imports (LegCo Paper No. CB(1)1595/96-97(02));

(d) a submission from KPS regarding HMVs "first opportunity to supply" proposal (LegCo Paper No. CB(1)1600/96-97).

I Matters arising

(LegCo Paper No. CB(1)1607/96-97)

2. The Deputy Secretary for Trade and Industry (DS/T&I) briefed members on the Administrations paper entitled "Legislative Council Bills Committee - Copyright Bill" tabled at the meeting. The paper set out the Administrations response to the following issues discussed at the meeting of the Bills Committee on 14 May 1997 -

(a) ephemeral recording (clause 77);

(b) exercise of concurrent rights (proposed clause 110(1A));

(d) articles and goods in transit (clause 132(4));

(e) voluntary licensing scheme for collective administration of copyright (Division VIII); and

(f) the Copyright Tribunal (Division IX).

Ephemeral recording (clause 77)

3. DS/T&I explained that the Administration intended to retain clause 77 as drafted on the ground that any permission to make back-up or library copies of licensed copyright works should be negotiated with the copyright owner rather than as a copyright exception. The statutory period of ephemeral right was only 28 days under the existing law. The Bill proposed to extend this to three months to bring it into line with the Broadcasting Authoritys requirement for a broadcaster or a cable programme service provider to keep copies of programmes for three months for inspection.

4. Noting that it was a standing practice of broadcasting organisations and cable programme service providers to pay royalties for reproduction rights upon expiry of the statutory period of ephemeral right, and that broadcasters should have been given a master copy of the work under the licence agreement with the copyright owner, members accepted the clause.

Exercise of concurrent rights (proposed clause 110(1A))

5. Members noted the Administrations intention to move a Committee Stage Amendment (CSA) to include certain guidelines which the court should take into account in granting leave to an exclusive licensee to proceed with civil actions against parallel importers without the copyright owner joining as a plaintiff. Factors to be considered would include whether the copyright owner could reasonably be reached or be available for the proceedings, and other exceptional circumstances beyond the reasonable contemplation of the exclusive licensee.

Application for forfeiture of seized articles (clause 129)

6. Members noted that to address their concern over the absence of a statutory time limit for the return of articles seized by the Commissioner of Customs and Excise for inspection, the Administration would move a CSA to clause 129 to specify that the Commissioner should "within a reasonable period" return any seized articles.

Articles and goods in transit (clause 132(4))

7. Members noted that the remedies available for infringement of copyrights and patents in respect of goods in transit were essentially the same.

Voluntary licensing scheme for collective administration of copyright (Division VIII)

8. Members noted the Administrations decision to withdraw the proposed amendments to clause 141(4) in the light of their comment that a narrow definition of licensing bodies might inadvertently give preferential treatment to large collecting societies. The proposed consequential amendment to clause 148 would also be withdrawn.

The Copyright Tribunal (Division IX)

9. DS/T&I advised that the Administration noted members comment for there to be clear and specific criteria for appointing members to the Copyright Tribunal. The Chairman and Deputy Chairman of the Tribunal would be persons qualified for appointment as District Judges. The other five members would be drawn from different sectors of the community to maintain a balance of interests. Appointment would be made on the basis of the merits of the individuals concerned, taking into consideration their personal ability, expertise, experience, integrity, commitment to public service and their overall suitability for appointment.

10. Members considered the above criteria too general and that the composition of the five ordinary members should be clearly delineated, for example, by specifying the trade sectors or professions. In response, DS/T&I emphasised that the Administration had always endeavoured to ensure that persons appointed to any tribunal would render the best judgement and advice to its functioning. At present, the Copyright Tribunal comprised a judge (the Chairman), two lawyers (one of them a Legislative Councillor) and one accountant. With the expansion of the Tribunals membership from three to seven upon enactment of the Bill, the Administration would appoint persons acquainted with copyrights. Due to limited experience in conducting hearings and a large variety of copyright works, flexibility should be retained to ensure appointment of suitable persons. Members requested the Administration to provide specific information on the constitution of the Copyright Tribunal at the resumed debate on the Bill.

11. Members noted a copy of the Copyright (Performing Rights Tribunal) Rules at Annex to the Administrations paper.

II Clause-by-clause examination of the Bill

(LegCo Paper Nos. CB(1)1379, 1545 and 1549/96-97)

12. Members continued with the clause-by-clause examination of the Bill.

PART III - RIGHTS IN PERFORMANCES

DIVISION I - THE RIGHTS, INFRINGEMENT OF THE RIGHTS AND REMEDIES FOR INFRINGEMENT

Clause 195 - Introductory

13. Members noted this clause.

Clauses 196 to 202 - Performers rights

14. Members noted these clauses.

Clauses 203 to 206 - Rights of persons having fixation rights

15. Members noted these clauses.

Clauses 207 and 208 - Exceptions to rights conferred

16. Members noted these clauses.

Clause 209 - Duration and rights

17. Members noted this clause.

Clauses 210 to 218 - Performers economic rights

18. Members noted these clauses.

Clauses 215 and 216

19. Members noted the Administrations proposed CSA to clauses 215(1) and 216(2) to clarify that infringements to the rights of persons having fixation rights would be actionable by the right owners. In recognition of established case law, clauses 105(2)(a) and 216(2)(a) would also be amended to substitute "nature (including the extent)" with "flagrancy".

Clauses 219 to 221 - Non-economic rights

20. Members noted these clauses.

Clause 222 - Remedies for infringement

21. Members noted the Administrations proposed CSA to delete subclause (b) consequent to the amendments to clauses 215 and 216.

Clauses 223 and 224 - Delivery up of infringing fixation

22. Members noted these clauses.

Clauses 225 to 227 - Supplementary provisions with respect to delivery up

23. Members noted these clauses.

Clauses 228 to 232 - Jurisdiction of Copyright Tribunal

24. Members noted these clauses.

Clauses 233 and 234 - Interpretation

25. Members noted these clauses.

DIVISION II - RIGHTS IN PERFORMANCES: PERMITTED ACTS

Clauses 235 to 256

26. Members noted these clauses.

DIVISION III - PROCEEDINGS RELATING TO IMPORTATION OF INFRINGING FIXATIONS

Clauses 257 to 267

27. Members noted these clauses.

PART IV - TECHNOLOGICAL MEASURES AND GENERAL

Clause 268 - Devices designed to circumvent copy-protection

28. Members noted the Administrations proposed CSAs to subclauses (2)(a) and (3).

Clause 269 - Rights management information

29. Members noted this clause.

Clauses 270 to 272 - Fraudulent reception of transmissions

30. Members noted these clauses.

Clauses 273 to 276 - General

31.Members noted these clauses.

Schedule 1 - Educational establishments

32. Members noted this Schedule.

Schedule 2 - Copyright: transitional provisions and savings

33. The Chairman drew members attention to the concern raised by KPS in its submission (LegCo Paper No. CB(1)1277/96-97(02)) regarding transitional provisions in paragraph 12 of Schedule 2. According to KPS, parallel imports made overseas by the Hong Kong copyright owner and then imported either directly from him or from a subsequent buyer did not fall within the definition of "infringing copy" in existing law and their importation or other dealing in them was not unlawful. However, the definition of "infringing copy" under the Bill would include such items, and paragraph 12(4) of Schedule 2 would not exempt the possession or dealing with such articles lawfully imported before the commencement of the Bill.

34. The Deputy Director of Intellectual Property (DD of IP) explained that since the case law was far from clear as to whether parallel imported goods were infringing copies under the existing law, the Administration considered it inappropriate to stipulate categorically in the Bill what was, or was not, an infringement, and to pre-empt any possible future judgements by Hong Kong courts on cases that might arise based on the existing copyright framework. Moreover, as the existing copyright law in Hong Kong was primarily governed by the 1956 Copyright Act of the United Kingdom (the 1956 Act), to ensure consistency, the Bill should model the transitional provisions in the 1988 Copyright, Designs and Patents Act (CDPA), which replaced the 1956 Act. As KPSs proposal might take away the rights of copyright owners, the Administration was in favour of maintaining the status quo. DD of IP further clarified that paragraph 12 of Schedule 2 had been drafted in line with the legal principle that acts done prior to the commencement of a new law would only be subject to the provisions of the previous law in force. He assured members that any goods imported legitimately under the existing copyright framework would remain legitimate after enactment of the Bill. Likewise, goods imported illegitimately under the existing law would not be immunised.

35. In reply to members question, DD of IP further explained that paragraph 12(4) of Schedule 2 defined the meaning of "infringing copy" for the purpose of clause 35. Under this paragraph, whether the making of an article constituted an infringement of copyright was to be determined by reference to the Copyright Act 1911 if the article was made before 12 December 1972, to the 1956 Act immediately before it was amended by the Intellectual Property (World Trade Organisation Amendments) Ordinance 1996 (Ordinance No. 11 of 1996) (the WTO Ordinance) if it was made on or after 12 December 1972 and before 10 May 1996, and to the 1956 Act as amended by the WTO Ordinance if it was made on or after 10 May 1996 and before commencement of the Bill. In other words, whether a parallel imported product was an infringing copy would be determined by the law in force when the act took place.

Schedule 3 - Rights in performance: transitional provisions and savings

36. Members noted this Schedule.

Schedule 4 - Consequential amendments

37. Members noted this Schedule.

Schedule 5 - Repeals

38. Members noted this Schedule.

III Discussion on outstanding issues

39. Members discussed the outstanding issues.

Copyright in labels attached to non-copyright goods and articles

40. DS/T&I and DD of IP advised that after taking into account members views and with reference to the Australian Copyright Amendment Bill 1992, the Administration proposed to amend clause 35 to the effect that copyrights which subsisted in labels or packaging of non-copyright goods would not be infringed by parallel importation of such goods into Hong Kong if the economic value of the goods was not predominantly attributable to the economic value of such accessory works. The Administration would table the draft CSA at the meeting on 16 May 1997.

Evidentiary requirement for proof of knowledge in parallel importation of copyright articles (clause 30)

41. The Chairman drew members attention to retailers grave concern over the definition of "reasons to believe". She opined that in view of the proposed reinstatement of criminal sanctions for parallel importation, the law should be more transparent in this aspect so that retailers could know with certainty when and whether their acts might infringe upon the rights of others. In this regard, she urged the Administration to incorporate in the Bill specific provisions to clarify the meaning of "reasons to believe".

42. In response, DS/T&I and DD of IP made the following points -

(a) Under the existing Copyright Ordinance, the plaintiff had to prove that the defendant had actual knowledge of the infringing activity, whereas under the Bill the copyright owner was required to prove that the defendant "knows or has reasons to believe" that he was dealing with infringing copies. The change of evidentiary requirement was necessary because of difficulties in requiring the copyright owner to prove actual knowledge. By lowering the threshold to having reason to believe, the burden of proof would be less onerous on the copyright owner and the exclusive licensee. This level of proof had been adopted in other local civil and criminal laws.

(b) Upon receiving some facts about a copyright work from the copyright owner or his exclusive licensee, the importer would have a certain period of time to enquire and verify these facts. Only when he deliberately turned a blind eye to the legality of the product and made no enquiries after the lapse of a reasonable period of time would he be taken to have "reason to believe" or even "knowledge" of the infringement.

(c) If the importer had grounds to suspect on the basis of information but failed to appreciate the significance, he might not be regarded as having "reason to believe". He would only be held liable when he appreciated the significance but still continued with the infringing act. In the Administrations view, the mere sending of a letter to the retailer by the copyright owner or his exclusive licensee might not necessarily imply that the retailer had "reason to believe".

43. Miss Margaret NG echoed the Administrations points and opined that whether the defendant had "reason to believe" would be decided by common sense. The onus lay with the plaintiff and the prosecution in civil and criminal actions respectively to prove that the defendant had "reason to believe" that he was dealing with infringing copies.

44. At the Chairmans invitation, the Assistant Legal Advisor (ALA) advised that it would be difficult for an importer to know for certain whether the sole distributor was also the exclusive licensee in the absence of written proofs. In view of this perceived practical difficulty, the Chairman urged the Administration to consider establishing a registry of exclusive licensees to facilitate importers to make enquiries on the legality of the products they intended to import. Some members doubted the need to establish such a registry in view of its resource and legal implications. Moreover, such a registry might be of limited use as it could not provide hard proofs on the terms of exclusive licences.

45. DS/T&I agreed to provide case law on the meaning of "reasons to believe" under various circumstances.

Criminal liability for making or dealing with infringing articles, etc. (clause 115)

46. The Chairman expressed concern about the wording of clause 115(3), which stated that "the person charged with an offence under subsection (1)" should "prove that he did not know and had no reason to believe that the article was an infringing copy of the copyright work.". She opined that this shifted the burden of proof from the plaintiff onto the defendant.

47. In response, DS/T&I and DD of IP clarified that in criminal actions, the prosecution had to provide prima-facie evidence of infringement in the first place.

48. Miss Margaret NG echoed the Administrations points. She referred members to subclause 115(1), which listed the conditions under which a person would be regarded as having committed an offence, and pointed out that this should be considered together with subclause 115(3). Defence would only come into play after the prosecution had provided evidential proof on a charge.

First opportunity to supply

49. On the option of "first opportunity to supply by the exclusive licensee", DS/T&I advised that the Administration did not support this proposal because the exclusive licensee would in most cases be subject to the licence agreement and would not be at liberty to source licensed products elsewhere without the consent of the copyright owner. It would not be fair if the exclusive licensees legitimate interests were prejudiced on the premise of conditions which might be beyond his contractual obligations.

Free public showing of programmes

50. The Administration agreed to respond to the submission of the Hong Kong Hotels Association (tabled at the meeting and circulated to members vide LegCo Paper No. CB(1) 1607/96-97) at the meeting of the Bills Committee on 16 May 1997.

Decompilation

51. Members noted the submission from the Business Software Alliance (BSA) (tabled at the meeting and circulated to members vide LegCo Paper No. CB(1) 1607/96-97). DS/T&I advised that after careful consideration of the views of deputations and members on the issue of decompilation, the Administration took on board most of BSAs recommendations and proposed to provide a limited exception for adapting or copying a computer program as a fair dealing by expanding the fair dealing provisions in the Bill on the basis of the US copyright law. The Administration also proposed to incorporate in the Bill the wording of Article 9.2 of the Berne Convention (1971) to clarify in general terms whether an act was permitted. The relevant draft CSAs would be ready at the meeting on 16 May 1997.

52. The Chairman reminded members that the next meeting of the Bills Committee would be held on 16 May 1997 at 12:30 pm.

53. 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, 15 May 1997, at 2:30 pm in the Chamber of the Legislative Council Building