HKSAR v. Chung Yu Cheung and Others

DCCC 236/2017

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO. 236 OF 2017

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REASONS FOR SENTENCE

D1 pleaded guilty to Charges 1 to 4. D2 pleaded guilty to Charges 3 and 4. D4 pleaded guilty to Charges 7 and 10.

2.Upon application by the prosecution, I ordered:  Charge 5 against D1 and D3; Charge 6 against D1 and D3; Charge 7 against D5 and D6; Charge 8 against D5 and D6; Charge 9 against D5; and Charge 10 against D6 be left in the court file and not to be proceeded against the respective defendants without leave of court.

Summary of Facts

Background

3.NowTV is a domestic pay cable television service operated and offered by PCCW Media Limited ("PCCW").  Viewers who subscribe to the service may watch the television channels included in their subscription plans.  PCCW is the copyright owner of all television programmes shown on all NowTV channels.

4.To protect its copyright, PCCW encrypted the signals of all NowTV channels at their sources and transmitted the signals in an encrypted format.  In order to watch any NowTV channels, viewers were required to sign a subscription contract with PCCW and to pay a monthly subscription fee.  PCCW would then install at the subscriber's address a NowTV cable output (for transmitting the encrypted signals) and a NowTV set top box ("NowTV STB"; for receiving and decoding the encrypted signals), which would be connected to a television screen.

The Maige Box

5.The Maige Box ("MB") is an electronic device, when connected to a power supply, a computer, a television screen and the internet, which would enable the user to watch NowTV channels without being a NowTV subscriber.  An MB obtained by an undercover customs officer from a test buy was examined by a computer expert, who confirmed that the MB could allow a user to watch up to 11 NowTV channels.

6.In February 2014, a suspicious website named "Maige TV.com" caught the attention of the Customs and Excise Department.  Investigation commenced and eventually resulted in the prosecution of the defendants in the present case.

7.Test buy operations were conducted.  The undercover customs officer purchased 2 MBs from the same stall situated at Apliu Street, Sham Shui Po respectively on 22 May and 14 June 2014.

The circumvention offences (Charges 2, 4 and 10)

8.D1 provided the "relevant service" particularized in Charge 2 by setting up and maintaining a programme signal transmission system at his home for the purpose of enabling or facilitating the circumvention of the copyright protection measures applied to the NowTV channels by PCCW.  In other words, the signal transmission system set up and maintained by D1 at his home enabled MB users to watch the NowTV channels without being a NowTV subscriber.  To set up the programme signal transmission system, D1 held 7 NowTV subscriptions (and thus had 7 NowTV outputs and STBs installed).  He connected the 7 NowTV STBs to a single tower case computer to transmit the decrypted signals of the NowTV channels.

9.D2 set up and maintained a similar programme signal transmission system at his home.  He held 3 NowTV subscriptions (and thus had 3 NowTV outputs and STBs installed).  D1 and D2 jointly provided the "relevant service" particularized in Charge 4.

10.On 17 June 2014, at the Mezzanine Floor, No.38 Kweilin Street, Sham Shui Po, D4 was found in possession of 34 MBs for sale.  The 34 MBs were the "relevant devices" particularized in Charge 10.

The conspiracy to defraud offences (Charges 1, 3 and 7)

11.The conduct of the defendants enabled MB users to watch programmes on NowTV channels without paying the required subscription fees, thereby putting the economic interest of PCCW at risk.

12.D1 and D2 conspired with others to defraud PCCW by making available the decrypted signals of NowTV channels to non-subscribers of NowTV service.  They committed Charges 1 and 3 respectively.

13.D4 conspired with others to defraud PCCW by supplying the MBs, which enabled non-subscribers of NowTV service to receive the decrypted signals of NowTV channels.  He committed Charge 7.

Mitigation

D1

14.He is 40 and married with 2 children (aged 8 and 4).  He has a clear record.  His counsel Mr. LO informed me that D1 has been employed by the same electronic engineering company for 8 years.  Despite his arrest, he was promoted from technician to supervisor in June 2016.  His employer speaks favourably of his performance.

15.In mitigation, Mr. LO submitted that D1 was not the mastermind.  He was recruited by a Mr. NG to set up the signal transmission system at his home.  Mr. NG provided all the equipment and taught D1 how to set up the system.  D1 then subscribed for 7 NowTV accounts and had all 7 decoders installed at his home.  Mr. LO explained that once the system was set up, there was nothing much for D1 to do.  From time to time, Mr. NG would contact D1 if something was wrong with the transmission.  D1 would then check if there was anything wrong with the computer or decoders.  D1 received $800 per decoder per month (inclusive of the NowTV subscription fees and electricity) as his reward.  D1's net gain during the offence period was about RMB20,000.  On behalf of D1, Mr. LO fairly informed me that D2 played a much lesser role than D1.

D2

16.D2 is 54 and married with 2 children (aged 17 and 9).  He has a clear record.  His solicitor Mr. FU informed me that during the offence period, D2 was a technician employed by a building management company.  His current income is $15,000 per month.  In December 2016, he received a commendation for his performance at work. 

17.In mitigation, Mr. FU submitted that he agrees with Mr. LO's submissions.  D2 was recruited by D1. D1 paid D2 $2,500 per month as his reward; whereas D2 had to bear the subscription fees of 3 NowTV accounts and electricity.  D2's net gain was about $1,500 per month.  D2 committed the offences out of greed.  Mr. FU informed me (and the prosecution confirmed) that D2 is the 1^st person to give an NPS in this case.  His NPS was taken in June 2017 with useful information given.

D4

18.D4 is 54 and married with 2 sons (the youngest one is aged 20).  He has 1 conviction record dated 1985, which was a minor offence involving use of violence.  For the purpose of sentencing, I would treat D4 as a person with a clear record.  According to his antecedent statement, D4 appears to be a sales person earning $300 per day.  It seems to be true since there is a mitigation letter from members of the Apliu Street Merchants Association.  His counsel Mr. FUNG informed me that about March/April 2014, D4 was diagnosed with cardiomegaly.  As a result, he was forbidden from strenuous exercises and had to do everything slowly.

19.In mitigation, Mr. FUNG submitted that D4 has decided to plead guilty some time ago and has given an NPS in August 2017 with useful information given.  Mr. FUNG further submitted that the present case did not involve a large scale operation.  Although not complaining about any delay by the prosecution, Mr. FUNG stated that 3 years have lapsed since D4's arrest.  Furthermore, the duration of Charge 7 was less than 1 month.

Sentence

20.In the course of mitigation, D1, D2 and D4, through their respective counsel, tried to persuade the court that someone else was the mastermind of this MB "business". I accept that there was perhaps someone more important behind; however, as revealed in the Summary of Facts, what each defendant did is clear.  Although they played different roles, in my view, they each contributed to the execution of the MB "business plan" and are equally culpable.  There is no need to distinguish their roles or to apportion their culpability.

21.For D1 and D2, the conspiracy in relation to Charges 1 and 3 lasted for about 9 months.  Based on the information disclosed in the Summary of Facts, the monthly subscription of 1 NowTV account charged by PCCW was $450.  Approximately 1,020 MBs were sold during the offence period.  In other words, the maximum potential loss which PCCW could have sustained was about $4 million[1].

22.For D4, I note that the conspiracy in relation to Charge 7 lasted for about 1 month.  The retail price of an MB was $2,500.

23.Prosecuting counsel Mr. TSANG has placed before me 2 decisions on sentencing by the English Court of Appeal in R v Tailor [2017] EWCA Crim 699 and R v Patel [2011] EWCA Crim 2704.  I have given them my due consideration.  Whether in Hong Kong or England, a general principle of sentencing in cases involving fraud or deception is to consider the loss suffered by the victim rather than the gain obtained by a defendant.

24.For Charges 1 and 3, I accept there is no evidence showing that D1 or D3 had any knowledge of how many units of MB were sold during the offence period.  In other words, they might not have had a genuine or realistic appreciation of the magnitude of the potential loss sustained by PCCW.  But they must have been aware of the fact that they were stripping off from PCCW $450 per month per MB.  Based on the figure of $4 million, I take the view that the basic starting point should be 3 years' imprisonment, to be adjusted according to the background of each defendant.

25.D1, with the guilty plea, I sentence him to 2 years' imprisonment each for Charges 1 and 3.

26.D2, with his guilty plea and assistance to prosecution, he is entitled to a 40% discount[2], I sentence him to 21 months' imprisonment for Charge 3.

27.Unlike D1 and D2, D4 must have had a pretty good idea as to how many units of MB were sold through his stall during that 1-month period.  According to the Summary of Facts, the 1,020 units of MB appeared to have been sold through D4's stall.  As such, the figure of $4 million applies to Charge 7 as well.  Hence, I also adopt a starting point of 3 years' imprisonment.  With his guilty plea and assistance to prosecution, I sentence D4 to 21 month's imprisonment for Charge 7.

28.The maximum penalty for Charges 2, 4 and 10 is a fine of $500,000 and imprisonment for 4 years.  I adopt a starting point of 15 months' imprisonment for each charge.

29.With his guilty plea, I sentence D1 to 10 months' imprisonment each for Charges 2 and 4.

30.With their guilty pleas and assistance to prosecution, I sentence D2 and D4 to 9 months' imprisonment respectively for Charges 4 and 10.

31.Charges 1 and 2; 3 and 4; 7 and 10 come in pairs.  I order the sentences in each pair to run concurrently.  In other words, for D2 and D4, the total prison term for each of them is 21 months.  For D1, having considered his role and the totality principle, I order 3 months in Charges 3 and 4 to run consecutive to the sentences in Charges 1 and 2, arriving at a total prison term of 27 months.