HKSAR v. MEI TGE KIT CO. LTD.

CACC262/99

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CRIMINAL APPEAL NO.262 OF 1999

(ON APPEAL FROM DISTRICT COURT CASE NO.1036 OF 1998)

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J U D G M E N T

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Gall J (delivering the judgment of the Court):

1. The applicant was charged in the District Court with one charge of making for sale infringing copies of copyright works without the licence of the copyright owner, contrary to ss.118(1)(a) and 125(1) as read with s.119(1) of the Copyright Ordinance, Cap.528.

2. The applicant entered a plea of guilty, before Judge Sweeney, having intimated the intention to do so at the third pre-trial review.

3. The learned District Judge convicted the applicant on his plea and fined the applicant the sum of $1,043,510, being the number of infringing copies multiplied by a figure of $65 per infringement.

4. The Company is in the business of producing compact discs and video compact discs. In the early hours of 8th April 1998, ICAC officers entered the factory of the applicant and found VCD production lines then not operating and a large quantity of VCDs. Later the same day, Officers of the Customs & Excise Department went to the premises of the factory and there found 16,395 VCDs suspected of infringing copyright.

5. As a result of examination by copyright holders of the 16,395 VCDs, 16,054 were found to have been made without the licence of the copyright owners, and were infringing copies of the copyright works. They were films. These facts were agreed by the applicant. The applicant now seeks leave to appeal against the sentence.

6. The amended perfected grounds of appeal read :-

"The learned judge erred in double-counting, to some extent, the number of Video Compact Discs on which the fine was based."

7. Counsel firstly argues that in determining sentence, the judge adopted as a starting point the figure of $100 per infringing copy as a matter of deterrence, and then reduced that figure to $65 per infringing copy to reflect the price of a typical cinema ticket and that by that reasoning, the sum of $65 should be applied to each completed movie and not to each disc.

8. Of the 16,054 VCDs seized there are 5,062 complete films (each of two discs), 1,851 side A copies, 4,075 side B copies and four unreadable sides of a film. Counsel argues that by using the analogy of the cost of a cinema ticket, the Judge assumed that a full movie was contained on each of the 16,054 discs with infringed copyright.

9. Firstly, it is wrong to say that the Judge used the cost of a cinema ticket to arrive at the fine he imposed per disc. In the course of his reasons, he said this :

"In passing, I note that the video CDs in this case are accepted to have a 'street value' of $240,000 or $15 per copy. This compares very favourably with a typical cinema seat of $65 per person, and common sense will make a connection between popularity and price. However, it is also obvious that huge profits can be made by people with no direct investment in the product."

That passage is no more than a comment firstly, that the discs sell well because they are so much cheaper than a cinema ticket, and secondly, that large profits are to be made from the sale of such discs. Rather, his decision as to the level of the fine to be imposed was derived from consideration of the figure of $50,000 set by the legislature as a maximum fine in respect of each infringing copy, together with the cases to which he referred : R v. Cheung Chi-keung and 3 Others, Case No.100022 of 1995 and R v. Li Wan-kei and Anor, Cr App No.13 of 1997.

10. It is accepted by Ms Remedios that each of the discs seized from the Company and referred to in the charge sheet is an infringement of copyright. What she argues, however, is that the fine in respect of an infringing copy of a completed film should differ from the fine to be levied in respect of an infringing copy of part of a film. In other words, where two discs were found which could be put together to make a complete film, a different approach as to the quantum of penalty should be adopted from the situation where a disc containing only half a film was found on the basis that the completed film has a greater value than half a film.

11. Ms Remedios having accepted that the Copyright Ordinance provides that copying of a substantial part of a copyright work without the licence to do so is an infringing copy, or that the reproduction of part of a copyright work is an infringing copy, it follows necessarily that each of the discs, the subject of this charge, is an infringing copy of copyright material. None of the discs seized has sufficient capacity, it would seem, to hold a full film, then it also follows that each of the discs seized contains an infringement of copyright by the copying of part of copyright material. That being so, each disc seized is on precisely the same footing. The fact that two discs can be put together to make a complete movie is immaterial as it does not avoid the fact that each disc is an infringement of part of copyright material.

12. We can, therefore, see no difference between the discs and no reason why the Judge should have adopted a different approach in arriving at the amount of fine in respect of any particular discs. Having considered the manner in which the Judge arrived at the amount of the fine to be levied by taking as a starting point of $100 and reducing it to $65 to recognize the plea and the clear record of the applicant, we can also find no fault with his approach. Accordingly, leave to appeal against sentence is refused.