PLC Paper No. CB(1)18/97-98
(These minutes have been
seen by the Administration
and cleared with the Chairman)
Ref: CB1/BC/14/96

Bills Committee on Copyright Bill

Minutes of meeting held on Tuesday, 22 April 1997, at 2:30 pm in the Chamber of the Legislative Council Building

Members present :

Members absent :

Public officers attending :

Mr Augustine CHENG: Deputy Secretary for Trade and Industry
Mr Stephen SELBY: Director of Intellectual Property
Mr Peter CHEUNG: Deputy Director of Intellectual Property
Mr Patrick NIP: Principal Assistant Secretary for Trade and Industry
Mr Vincent Y K POON: Assistant Commissioner of Customs and Excise
Mrs Spring FUNG: Deputy Principal Crown Counsel
Mr Johann WONG: Assistant Secretary for Trade and Industry
Ms Elizabeth TSE: Principal Assistant Secretary for Trade and Industry

Attendance by invitation :

Pacific Satellite International Limited: Mr Vincent TSANG
Director of Sales and Marketing: Mr Victor CHAN
Technical Sales Manager

Clerk in attendance:


Miss Odelia LEUNG: Chief Assistant Secretary (1)1

Staff in attendance :

Ms Kitty CHENG: Assistant Legal Adviser 2
Ms Sarah YUEN: Senior Assistant Secretary (1)1

I Meeting with Pacific Satellite International Ltd.

II Meeting with the Administration

III Any other business

I Meeting with Pacific Satellite International Ltd.

(LegCo Paper No. CB(1)1341/96-97(01)

1. The Chairman welcomed the representatives of Pacific Satellite International Ltd. (PSIL). At her invitation, Mr Vincent TSANG briefed members on PSILs submission. Members noted that at present, licensees of Satellite Master Antenna Television (SMATV) systems might re-transmit non-encrypted satellite broadcasts (such as those of STAR TV) without infringing copyright, by reason of exemptions in the present law (section 14(8A) of the Copyright Ordinance (Cap. 39)) and their licences. The Bill proposed to remove these exemptions (clause 82) and enable satellite broadcasters to withhold copyright permission to re-transmit non-encrypted signals, or to impose copyright royalties or conditions for such re-transmission. In other words, once the Bill was passed, non-encrypted transmissions would no longer be regarded as "capable of being lawfully received by members of the public unless with the express authority of the person making the transmission or the person providing the contents of the transmission". Dealings in devices designed or adapted to enable or assist persons in receiving transmissions without authority would also amount to infringement of copyright. According to Mr TSANG, removal of copyright exception for re-transmission of non-encrypted signals would have the following adverse effects -

The removal would nullify SMATV subscribers investment in SMATV hardware. About 500,000 SMATV subscribers in Hong Kong would be denied access to satellite broadcast material unless they were prepared to pay the copyright owners for such broadcasts. However, even though subscribers were willing to pay and SMATV operators were prepared to negotiate with the copyright owners for re-transmission of broadcasts, SMATV operators were prohibited under existing licensing conditions from paying for programmes. As a result, SMATV hardware might become useless.
The removal would narrow the choice of programmes currently enjoyed by subscribers. Whilst they might subscribe to Cable TV to gain access to some of the satellite programmes, as Cable TV had its policy of programme selection and editing, the general publics choice of programmes would nonetheless be restricted.
SMATV operators businesses would be seriously affected. Differing from Cable TV, SMATV only dealt in hardware for re-transmitting satellite programmes. Should the Bill be passed, operators would be reluctant to invest further in transmission technology. Local development of technology in this area would be stunted and foreign broadcasters would hesitate to set up stations in Hong Kong.
If Hong Kong was restricted access to overseas satellite information, its position as one of the worlds major economic centres might be jeopardised.

2. Mr TSANG emphasised that broadcasters who chose not to encrypt their programme signals should be presumed to have given up their rights to impose copyright royalties for re-transmission of their programmes. The Government should not interfere with the present arrangements which had been working very well. He urged members to delete clause 82 of the Bill.

3. Some members were of the view that it would be difficult for broadcasters to identify the recipients of their satellite signals for charging royalties. Mr TSANG disagreed with this view and explained that there should be no difficulties in identifying the recipients on a block-by-block basis. The broadcaster could then issue a demand note to the relevant owners corporation (OC). While a broadcaster of non-encrypted programmes might all along not intend to impose copyright royalties, he would not hesitate to do so should he be provided with such a chance.

4. The Assistant Legal Advisor drew members attention to the Law Reform Commissions (LRC) recommendation that a non-encrypted programme signal should be presumed to be intended for general reception, unless the programme originator or its agent or its licensee had declared publicly and notified the Broadcasting Authority that the programme was not intended for general reception and that it would charge a fee for the right to view the programme in Hong Kong. Members sought clarification from the Administration on the reasons for not accepting this recommendation. In response, the Administration explained that after release of the LRC Report, the international law had clearly established that the authors of a programme should enjoy exclusive rights of authorising broadcasting or communication without the need to go through any type of formalities to assert their rights, whether through registration or encryption. Any diminution of the right should be through specific exceptions made in the law which were subject to the restriction that they must not interfere with the owners normal and reasonable right to exploit his work. Pursuant to this new international consensus, the Administration decided that any new copyright law in Hong Kong should provide a legal framework within which authorised broadcasters and cable programme providers could stop unauthorised use of their products.

5. While accepting the Administrations explanation, members opined that since SMATV operators only dealt in hardware and were not exploiting the programme material to generate income, they should therefore be allowed to re-transmit non-encrypted material under specified circumstances. They requested the Administration to advise on overseas practices in this regard. In response, the Administration provided the following comments -

The hardware provided by SMATV operators was different from an ordinary antenna in that it enabled viewers to receive satellite transmission of overseas television programmes which might infringe broadcasters exclusive rights to broadcast these programmes.
Non-encrypted signals were not necessarily "free-to-air". Some signals which were not intended for general reception might nevertheless be non-encrypted. The Bill therefore provided that, whether or not encrypted, signals meant for certain markets or classes of recipients should not be freely re-transmitted without the payment of copyright royalties. Copyright was an exclusive right. Exceptions should be as few as possible. The relationship between the copyright owner and the copyright user should be decided by market forces rather than through legislation. SMATV operators should seek approval from the copyright owners to re-transmit their broadcasts.
The Copyright Ordinance had been amended to provide for copyright exception to Cable TV. All relevant parties, including SMATV operators, were fully aware that any exception was a temporary arrangement and that it would be reviewed in localising the existing copyright legislation. Moreover, during public consultation, broadcasters had complained about infringement of their exclusive rights to broadcast certain programmes by SMATV operators.
As all World Trade Organisation member countries were prohibited from imposing formalities, including encryption, as a condition for asserting copyrights, the proposed removal was consistent with Hong Kongs commitment and international obligation to protect intellectual property rights. Hong Kong had to ensure that foreign broadcasting organisations would be protected under the copyright law in Hong Kong.

6. On the impact of removing re-transmission exemption, the Administration made the following response -

Most SMATV licensees currently only offered services broadcast by Asiasat 1 which principally covered STAR TV and some Chinese television services. As STAR TV had indicated that it would be willing to give copyright permission for re-transmission of its service notwithstanding the removal of the re-transmission exemption in the Bill, most households served by SMATV systems would still have access to STAR TV programmes.
The Administration had discussed the issue with the Broadcasting, Culture and Sport Branch and the Office of the Telecommunications Authority. The conclusion was that in recognition of the technical difficulties in implementing clause 82, especially in identifying the copyright owner for obtaining re-transmission permission, the Administration would amend the Bill to incorporate the concept of implied consent to the effect that if the copyright owner did not explicitly raise objection to re-transmission of his non-encrypted programme signals, he would be taken to have given permission for free viewing of his programmes.

7. Mr TSANG pointed out that even though SMATV operators could obtain permission for re-transmission, under their licenses, they were not allowed to pay or charge for re-transmission. In response, the Administration advised that it was aware of this technical problem and would review SMATV licensing conditions in due course.

8. Members accepted that the general public did not have an absolute right of free access to satellite programmes which were copyright works and should be subject to the exploitation of copyright owners. It was important that Hong Kongs policy on reception and broadcasting of satellite TV signals should comply with obligations arising from international treaties or conventions on the one hand and strike a balance of interest among copyright owners, providers of the technology, and the public on the other. The Chairman urged representatives of PSIL to liaise with the Administration to ensure wider programme choice for the public without infringing copyrights. Miss Margaret NG further pointed out that most of the problems arising from the Bill related to protection of exclusive rights rather than copyrights. She opined that the Bills Committee should decide how far protection should be extended to exclusive licensees.

II Meeting with the Administration

(LegCo Paper No. CB(1)1341/96-97(02) and a table on seizures of infringing articles in copyright piracy cases tabled at the meeting and circulated to members vide LegCo Paper No. CB(1)1371/96-97)

9. The Deputy Secretary for Trade and Industry (DS/T&I) briefed members on the Administrations paper entitled "Compatibility of the Copyright Bill with the Agreement on Trade-Related Aspects of Intellectual Property Rights (the TRIPS Agreement)". This was in response to the submission from the Hong Kong Institute of Trade Mark Practitioners (HKITMP), claiming that clauses 14(2) and 15(2) of the Bill regarding employee works and commissioned works were contrary to the TRIPS Agreement and that there was no exception in the TRIPS Agreement for goods in transit in relation to border control measures. The Administration confirmed that the provisions were compatible with the TRIPS Agreement. Members noted the paper.

10. DS/T&I then referred members to the table on seizures of infringing articles in copyright piracy cases tabled at the meeting (LegCo Paper No. CB(1)1371/96-97). He pointed out that the effectiveness of the Administrations enforcement actions depended on co-operation of right holders to testify in court. In some cases, copyright owners refused to give evidence; in others right holders could not be identified. Although the Administration had enlisted the assistance of such trade unions as the Business Software Alliance and the Software Publishers Association in identifying the copyright owners of seized articles, 80% of suspected pirated articles had to be returned to the suspects due to the lack of sufficient evidence for taking prosecution actions. He urged members to support the proposed additional legal tools in the Bill, including modified procedural provisions to facilitate proof of copyright subsistence and ownership, and provisions to enable Customs and Excise Department (CED) to exercise power of forfeiture over seized suspected pirated copyright works, enhance its enforcement capability and facilitate better co-operation with copyright owners and enforcement authorities of other countries.

11. DS/T&I and the Assistant Commissioner of Customs and Excise also urged members to consider the Administrations proposal to introduce a Committee stage amendment to modify and expand the scope of clause 33 of the Bill to make persons civilly liable for knowingly permitting their premises to be used for copyright infringement activities for trade or business purpose. The Administration considered this to be a moderate step to further enhance the effectiveness of anti-piracy efforts.

12. Members opined that seizures at border were small as compared with those at other levels, standing at a ratio of 1 to 8. In response, the Administration provided the following explanations -

Admin.

Actions were mainly taken on intelligence as CED could not check each and every vehicle at the land border to avoid holding up border traffic. Moreover, infringing articles could enter Hong Kong by air and sea. At members request, the Administration would provide supplementary information on the quantity and value of infringing articles seized by CED other than at land border control points.
It was a conscious decision of CED to focus its anti-piracy efforts at the retail level. Following seizures at the retail level, the Administration could obtain useful trails on the storage, distribution, manufacture and even importation of such articles. In terms of effectiveness, enforcement action at the retail level achieved better results than border measures.

13. In reply to members queries on the effect and adequacy of joint operations with the Chinese Customs at land border control points, AC of C&E made the following points -

Joint operations sent a strong message of the determination of both Hong Kong and China to fight piracy. CED had to liaise with the Chinese Customs on the dates of such joint operations which were carried out in response to intelligence. The frequency of these joint operations must not fall into a pattern. Apart from joint operations, normal daily spot checks were taken at every control point.
Owing to its smaller volume of traffic (around 1,700 vehicles as against 15,000 vehicles at Mankamto) and shorter operating hours, Shatoukok was not included as one of the control points where joint operations with the Chinese side were conducted.

14. While recognising the difficulties in taking border measures, members were nonetheless dissatisfied with the results of border interceptions. They maintained that to prevent inflow of infringing articles, border measures were important. In this regard, they urged the Administration to seriously consider gearing up border measures and allocating sufficient resources to better equip CED to combat piracy. In response, the Administration emphasised that in stepping up border measures, care must be taken to avoid creating undue interference with traffic flow. The Finance Committee of the Legislative Council had recently approved staff increase in CED to combat piracy. The installation of updated scientific equipment had already been included in the improvement plan of Lok Ma Chau.

Admin.

15. A member agreed with the Administration that border control would ultimately have to rely on intelligence and that actions should be directed at the source. At members request, the Administration agreed to provide additional information on the difficulties in enforcing criminal sanctions for parallel imports under the existing law.

III Any other business

16. The Chairman informed members that the Bills Committee had received more than 80,000 signatures from KPS in support of deregulation of parallel importation. She reminded members that the next meeting of the Bills Committee would be held on 25 April 1997 at 10:30 am to discuss parallel imports and clause 33; the meeting scheduled for 1 May 1997 had been cancelled; and three additional meetings had been scheduled for 30 April, 5 May and 8 May 1997 respectively.

17. The meeting ended at 4:30 pm.

Provisional Legislative Council Secretariat
9 July 1997

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