Intellectual Property Laws Amendment Bill [B8-2010]: Department of Trade and Industry: Briefing

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Trade and Industry

18 May 2010
Chairperson: Ms J Fubbs (ANC)
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Meeting Summary

Members had realised that the implications of the intellectual Property Laws Amendment Bill [B8-2010] were more complicated than originally envisaged. Because of its importance and the need to make it a robust piece of legislation, since it must stand the test of time not only in South Africa but internationally, Members had felt that the Committee must fully acquaint itself and thoroughly understand the Bill’s character, nature and objectives; such understanding must be guided by a comparative perspective. Therefore the Committee had decided to postpone its public hearings. The Committee would of course be conducting its own awareness campaign by means of radio and other media to reach all parts of the country.

The Department of Trade and Industry briefed the Committee on the Bill and its aim to protecting indigenous knowledge and the rights of indigenous communities. The Department wanted to prevent ‘poaching’ of indigenous knowledge in South Africa by potential ‘innovators’, and believed that this Bill would facilitate mechanisms to achieve that protection.

There was no single definition of indigenous knowledge. It was created by the mind and could be reduced to any form of recording, and could be transferred from generation to generation. It might include, but not be limited to, culture, health, agriculture and religion. It commonly referred to knowledge and skills that people in a given community or society had developed over time and had continued to develop and practice. It was embedded in culture and was unique to a given location or society. It served as the basis for decision-making of communities in food security, human and animal health, education and natural resource management, for example, herbal medicine. T
he creations and inventions of people needed to be protected so that they could exploit them commercially. Indigenous knowledge was important in the development and sustainability of local communities and the poor. Knowledge, not capital, was the key. Of great importance was craft and tourism. The South African legal context was explained. Existing legislation mainly protected tangible aspects of indigenous knowledge, not the intellectual property component. Examples of the use in foreign law of intellectual property to protect indigenous knowledge included Egypt, Tunisia, and former French colonies. 

The Bill sought
to complement existing legislation. Its principles were recognition, commercialisation, compensation, empowerment, and transparency and fairness.  It provided for registration and identification of the intellectual property component of indigenous knowledge for protection from unlawful use. Registration would be done through the Companies and Intellectual Property Commission established in terms of the Companies Act 2008. The Bill further provided for the licensing of indigenous knowledge rights, the exchange of knowledge from the owner to a third party subject to compulsory permission or consent being granted, compensation for use, the creation of a database of intellectual property and indigenous knowledge for storage, keeping and verification or validation, education and awareness of communities, and the establishment of structures for enforcement.

A policy had been drafted in consultation with relevant departments, provincial governments, and other Government agencies such as the Agricultural Research Council, universities, and the World Intellectual Property Organisation. Cabinet had approved the Bill in March 2010 and the Bill was introduced to Parliament in March 2010. Consultation on the Bill had been taking place in various forums.

Members asked what measures the Department had taken to ensure that this Bill benefited those members of the community who were normally excluded from active engagement because they had never been able to go to school; noted that there must be a strong capacity for research embedded n the Bill and that the Bill was very progressive but must reconcile and minimise the conflict between South Africa’s emphasis on the community and the developed world’s emphasis on individual rights; appreciated the Department’s efforts; asked about examples of protecting indigenous knowledge in Tunisia, Egypt, and New Zealand; and about ways of distributing fairly the benefits of indigenous knowledge. A Member of the Democratic Alliance observed that the Constitution protected property and property rights and noted that many items that the Bill sought to protect did not belong to a specific individual or group but rather to South Africa as a whole, for example, rooibos. Moreover, communities and cultures were now mixed. Also the Bill would be complicated and expensive to administer and might well require a new department.  

The Department appreciated that people might be confused as to how the new Bill might translate into practice. However, the Department wished to assure Members that it was not introducing new legislation to overturn existing arrangements. The Bill rather extended protection to protect the various aspects of intellectual property that had not been protected previously.

Meeting report

Introduction
The Chairperson welcomed Members and the Department of Trade and Industry (dti). On closer study and examination of the Bill, Members had realised that its implications were more complicated than originally envisaged. Because of its importance and the need to make it a robust piece of legislation, since it must stand the test of time not only in South Africa but internationally, Members had felt that the Committee must fully acquaint itself and thoroughly understand the Bill’s character, nature and objectives. Such understanding must be guided by a comparative perspective. Therefore the Committee had decided to postpone its public hearings, and had sent apologies to all those stakeholders inconvenienced by the change of programme. The Committee would of course be conducting its own awareness campaign by means of radio and other media to reach all parts of the country.

 

Department of Trade and Industry: briefing
Ms Zodwa Ntuli, Deputy Director-General: Consumer and Corporate Regulation Division (CCRD), dti, briefed the Committee on the purpose and provisions of the Intellectual Property Laws Amendment Bill. In 2004, Cabinet had adopted a policy on indigenous knowledge. The Bill was aimed at protecting indigenous knowledge and the rights of indigenous communities.

Ms Ntuli said that there was no single or all-encompassing definition of Indigenous Knowledge (IK). It was something that was created by the mind and could be reduced to any form of recording.  It could be transferred from generation to generation. It might include, but not be limited to, culture, health, agriculture and religion. IK commonly referred to knowledge and skills that people in a given community or society had developed over time and had continued to develop and practice. IK was embedded in culture and was unique to a given location or society. It served as the basis for decision-making of communities in food security, human and animal health, education and natural resource management, for example, herbal medicine.

Ms Ntuli explained why it was important to protect IK. T
he creations and inventions of people needed to be protected so that they could exploit them commercially. IK embraced much knowledge that was mostly rural. The importance of IK was that it was an important aspect of the development process of local communities and the poor. Knowledge, not capital, was the key to sustainable development of communities. Also IK was the key element of the ‘social capital’ of the poor, their main asset to invest in the struggle for survival, to produce food, to provide for shelter or to achieve control of their lives. IK had importance in conferring socio-economic benefits to IK holders and could be a catalyst for empowerment and economic development of the rural population in the agricultural environment. Moreover, it could be improved progressively and passed from one generation to the next. However, IK holders were vulnerable to transfer of IK to industrial economies without proper recognition and compensation.

Ms Ntuli emphasised the role of IK in the sustainability of communities. Sectors or areas of IK of special importance to the poor included agriculture, animal husbandry and ethnic veterinary medicine, the use and management of natural resources, primary health care, preventive medicine and psycho-social care, and savings and lending, for example - stokvels and burial societies. Other areas included community development and poverty alleviation, for example, by exchanging IK and integrating it into the developmental process programmes. Also of great importance was craft and tourism.

Ms Ntuli said that the South African legal context included the National Heritage Resources Act, the Heraldry Act, the National Environment Biodiversity Act 2004, the Plant Varieties Act, the Health Traditional Healers Act, and the Publicly Financed Research Act. The first two Acts were administered by the Department of Arts and Culture. The Department of Cooperative Governance and Traditional Affairs administered various laws that had bearings on the protection and recognition of IK from the perspective of traditional leaders.

The above legislation mainly protected tangible aspects of IK, not the Intellectual Property (IP) component of IK. The common law could also protect IK through the principles of trade secrets.  The importance of the IP component of IK needed protection; hence the proposed legislation. The Bill sought to advance the potential social and development benefits to the poor of IK from the IP point of view. It did not replace or duplicate existing legislation, but would ensure proper alignment and integration into the national development process.

Mr MacDonald Netshitenzhe, Director: Commercial Law and Policy, CCRD, dti, said that the Department wanted to prevent the wrongful exploitation of IK in South Africa. Examples were mainly in the area of patents. The Khoisan community had gone to court and obtained a benefit sharing agreement. Rooibos had been made a trade mark in the United States of America but this was subsequently cancelled. This was just an indication that the intellectual property of indigenous people could be unfairly exploited.

Non-protection of IK from the IP perspective rendered IK vulnerable to ‘poaching’ by potential ‘innovators’ in the IP system. Protection of IK through the IP system did not seek to frustrate innovation but to encourage innovation in a transparent, fair and equitable manner to both parties under these different systems. There had been many examples of the inequitable exploitation of IK in South Africa.

Mr Netshitenzhe gave examples of the use in foreign law of IP for the protection of IK. Such examples included Egypt, which used the system of trade marks to protect Egyptian cotton. Tunisia and 14 former colonies of France used copyright to protect artistic work derived from folklore: permission had to be asked from the relevant authority. Samoa put emphasis on moral rights under copyright and related rights law to protect IK. Indonesia put emphasis on copyright and geographical indications.

Biodiversity laws, cultural laws, heritage laws, and other laws that purported to protect IK but were not dovetailed with the IP laws might not achieve the desired effect. The converse was also true.

Mr Netshitenzhe said that the Bill sought
to complement existing legislation. The Bill’s broad objectives were to improve the livelihoods of IK holders and communities, to benefit the national economy, to prevent misappropriation or bio-piracy, and to provide the legal framework for protection and empowerment of local communities to improve their social wellbeing.

The Bill’s principles were recognition – to provide communities the right to claim ownership, commercialisation – to provide the opportunity to exchange knowledge for commercial purposes and generate income, compensation – to provide the right of an owner of IK to a reward for use of the knowledge, empowerment – to raise awareness of the importance of IK in economic development and provide a platform for partnership in commercialising the knowledge, and transparency and fairness – to ensure a fair and transparent process for usage and registration of rights.

The Bill provided for registration and identification of the IP component of IK for protection from unlawful use. Registration would be done through the Companies and Intellectual Property Commission established in terms of the Companies Act 2008.

The Bill further provided for the licensing of IK rights, the exchange of knowledge from the owner to a third party subject to compulsory permission or consent being granted, compensation for use, the creation of a database of IP and IK for storage, keeping and verification or validation of IK, education and awareness of communities, and the establishment of structures for enforcement.

The structures for enforcement would incluce a national council (NC) to advise the Minister on IK and the registrars of IP, a community trust and collecting societies, tribunals and courts to enforce IK rights including settlements from an alternative process for the resolution of disputes, an alternative structure for the resolution of disputes, the provision for investigation of possible violations and an inspectorate enforcement model to monitor compliance, and penalties.

The Department had followed a process as outlined. A policy had been drafted in consultation with relevant departments, provincial governments, and other Government agencies such as the Agricultural Research Council, universities, and the World Intellectual Property Organisation WIPO. Cabinet had approved the policy in 2007. Thereafter, the Department had consulted other departments further. There was public consultation in 2007. Consultations were held with non-governmental organisations, IP practitioners, librarians, and A2K organisations such as the Mark Shuttleworth Foundation. IP practitioners were divided in their support, but other stakeholders supported the Bill. A2K and librarians believed that the Bill should recognise exceptions and limitations. Artists and other formations supported that the Bill should regulate all collecting societies in all domains of copyright and not only in ‘needle time’ royalties. One presentation was given at the National Economic Development and Labour Council (NEDLAC) in 2007.

On 09 December 2008 the NEDLAC process was begun again and concluded in September 2009.

The new Cabinet had presided over the Bill and had ordered a Regulatory Impact Assessment (RIA). The RIAs terms of reference stated that the assessment concentrate on cost and benefit analysis. The final report was inconclusive as it lacked data in particular from NEDLAC. The National Treasury (NT), the Department, and the Presidency treated the RIA as a research report and conducted their own in which they concluded that benefits would outweigh costs.

The information from the analysis of the rooibos industry was very useful in assisting the Department’s RIA to reach its conclusion.

Cabinet approved the Bill in March 2010 and the Bill was introduced to Parliament in March 2010.

Consultation on the Bill had been taking place in various forums such as the Law Society and free market foundations.

Forms of IP included patents, trade marks, copyright, and designs. Geographical Indications (GI) were a product peculiar to a particular area on account of particular skills, climate or soil type, for example, rooibos and honey bush. GIs could therefore be the same as trademarks because they were jointly owned by a particular association or community. However, in certain instances they were stand-alone and Government could declare unilaterally what constituted a GI and then convince trading partners to recognise them, for example, ‘champagne’ for sparking wines ‘owned’ by France. South Africa could also unilaterally declare what constituted a GI. Designs could include something that mimicked the function of the original design, for example, a product of a lower standard that performed the same function as a wheelbarrow. Industrial designs might be used to protect, for example, textile design that was richly indigenous.

Ms Ntuli said that the Department had covered the essence of the Bill and hoped that Members would appreciate the problems and help facilitate the mechanisms through which IK should be protected. The Department believed that this Bill would achieve that protection.

Discussion
The Chairperson thanked the Department. Some Members would recall a preliminary briefing the previous year. Today’s was a broader briefing.

Mr X Mabaso (ANC) asked what measures the Department had taken to ensure that this Bill’s benefits would reach those members of the community who were normally excluded from active engagement due to their not having had the opportunity to go to school.

Mr S Marais (DA) observed that ‘the devil will be in the detail’. He said that the Department’s intentions were no doubt honourable, but once detailed discussion was reached, practical problems would be found. He gave the example of music. A well-known singer, Johnny Clegg, would no longer be able to write songs any more, but would have to refer to the community from which his songs may have originated. In Mr Marais’ own frame of reference, the area where and the people with whom he grew up had an influence on his actions and what he was. ‘So suddenly I cannot do what I am anymore, because I must go to a community. Who is this community?’

Mr Marais said that to use the example of the Afrikaner community and Afrikaner music, it had to be asked who constituted the Afrikaner community. He said that he was an Afrikaner, but asked where the Afrikaner community was and how it would benefit from the Bill.  It had to be asked how the Department would identify these legitimate and authentic communities. In South Africa, communities had integrated to such an extent that perhaps in the majority of cases it would not be possible to identify a community in the way that it would have been possible in the 1650s. How would it be done in reality and practice? It must be remembered that the Constitution protected property. This protection included property rights. The example of rooibos was a very good example.  Rooibos was South African: it did not belong to a group or a specific culture. It belonged to South Africa. Moreover it grew wild. Practical issues must be considered.

Mr G Radebe said (ANC) that a Bill of this nature was long overdue. It was well known that African resources had been long exploited by the colonial powers. The Department was very progressive in trying to protect what was indigenously African. However, in order to provide that protection, there must be a strong capacity for research embedded in structures of the Bill. This Bill was very progressive, but there might be a clash of cultures. South Africa emphasised the community. The Western developed countries emphasised individual rights. He asked what the Department could do to minimise a potential clash of cultures.

Mr S Njikelana (ANC) referred to the example of Samoa and Tunisia. There was need for elaboration on what Mr Radebe had said. The forms of protection that had been legislated for in Tunisia and Samoa seemed to be very interesting and it would be helpful to spend two or three minutes learning more about them. It was important to have an organised structure to protect intellectual property because people were unscrupulous and wanted only to make money out of indigenous creativity. Hence he joined other Members in appreciating what the Department had done, and agreed with Mr Marais about the practical difficulties of implementing the Bill. He asked for specific information on what had led to Samoa and Tunisia’s introduction of specific intellectual property legislation.  What were those two countries trying to protect?

Mr N Gcwabaza (ANC) said that it might be difficult to be retrospective and protect an invention dating back centuries. It might indeed be possible to protect recent inventions such as medications for human immunodeficiency virus and acquired immune deficiency syndrome (HIV and AIDS).  He asked for some thought on that. He asked about Egyptian cotton. A number of African countries were producing cotton. Was there something very special about Egyptian cotton that made Egypt take legislative measures to protect it?

The Chairperson asked how an individual Maori laid claim to whatever the benefits were. How were those benefits distributed?

Ms H Line (ANC) asked about the process that the Department had followed.  She noted that IK providers were divided in their support of this Bill. What were the arguments and counter arguments?

The Chairperson said that Ms Line’s concern was of great value to the Committee’s discussion.

Ms Ntuli replied that she would allow her colleagues to answer. 

Mr Netshitenzhe said that generally in South African law one did not legislate backwards, one legislated forwards. The Department had found that other jurisdictions likewise did not legislate backwards. However, in public interest cases, the community itself could take the matter to court to say that it acknowledged that the legislation did not apply retrospectively, but it wished to claim its rights against a certain party that had seized its intellectual property. Egyptian cotton was an especially valuable form of cotton that the Egyptian government felt duty-bound to protect in the form of a trade mark. With a control established, the Egyptian government could derive revenue for the Egyptian nation to benefit generally. In New Zealand the communities were scattered. The Maoris had sub-communities, but they had agreed that they originated from a common ancestor. They had trusts and sub-trusts to distribute the benefits of intellectual property.   

Mr Netshitenzhe gave the example of the General Motors Company which had shareholders all over the world, but when there were dividends to distribute, it found no problem in distributing them to the shareholders, so long as the company’s institutional memory was intact. He himself came from Limpopo but was now in Gauteng, so if there were a Venda trust, and a benefit was declared, the benefit would follow him wherever he was. The Council for Scientific Research (CSIR) had assisted in establishing trusts.

Mr Netshitenzhe said that some lawyers advocating on behalf of indigenous communities supported the proposed legislation, while others supported sui generis legislation [legislation of a special kind) because currently there was no legislation to protect that which was special. The Department did not favour sui generis legislation. During the public hearings the lawyers would talk for themselves. The Department wanted to protect the products of any community so that no one could come from outside and claim that that product was his. This applied to rooibos and a particular community. The Department wanted to assist that community to be appreciated.

Mr Netshitenzhe said that he would defer answering Mr Radebe’s question on research capacity.

Mr Netshitenzhe responded to Mr Njikelana’s question about Samoa and Tunisia. He noted that with regard to moral rights and copyrights, the law provided for protection of moral rights. He gave the example of a communal dance, that if danced in a certain way the community could say that it was offended by the way another party danced it. Therefore that community could approach the court and seek an interdict against that other party. This was an aspect of copyright, but also of moral rights. Therefore the Department said that this Bill might include aspects of moral rights in protecting indigenous knowledge by analogy. Tunisia in 1976 legislated to protect arts and crafts, in particular carpet making, by means of trademarks. Tunisia considered that music belonged to the state on behalf of the community. If anyone wanted to rearrange or adapt folk music, he must consult the Tunisian government on behalf of the Tunisian people.  The Francophone African countries had adopted a similar approach. There was also a decision of UNESCO and WIPO in 1982 on these issues.  The Bill sought to adapt such international treaties

Ms Nomfundo Maseti, Chief Director: Policy and Legislation, CCRD, dti, addressed Mr Mabaso’s question. The Department regarded education and awareness as very important in empowering the communities and sought to include provisions in the Bill for such education and awareness of IK and to assist the communities appreciate the developmental aspects of IK, particularly as regards herbal medicines, with a view to sustaining themselves socially.

Ms Maseti said that IK would need to be identified. At present there was not a database in which IK was documented. The key processes would be identification and recognition of IK to locate the owner of the IK, and to document that permission was given by the owner to another party to use that knowledge for something else or to adapt that knowledge. Adaptation was a key aspect of knowledge that was unique to a particular cultural group or community. Mechanisms would be included in the Bill to ensure that no one could use or adapt that knowledge without obtaining permission. The Bill would also include mechanisms for the validation, testing and assessment of items of IK. Even traditional medicines and foods could be subjected to such processes and proven effective. The World Development Report of 1998/99 dealt specifically with such mechanisms. There were a number of examples in Africa. It was important to document this information. Without documentation one could not prove that the IK was owned. The communities were willing to share knowledge but vulnerable to exploitation. The Bill provided for benefit sharing so that the communities could share in the compensation and reward.

Ms Maseti said that research capacity was very important and must be built into the Bill to assist and empower the communities so that they could see the intellectual property of indigenous knowledge as an instrument of development and social sustainability. The World Bank had recognised the need to enable the transfer of indigenous knowledge without disadvantaging the communities.

The Chairperson asked Members if their questions had been answered.

Mr Marais replied that his questions had been answered only selectively. His specific questions had not been answered. How would the Bill be administered, and who would pay? The Department had spoken broadly and vaguely.

Mr Gcwabaza supported Mr Marais’ question about Johnny Clegg, the singer, who had promoted the Zulu culture and music. His work had been much accepted by the Zulu people and the African people in particular. Therefore it was important not to begin through this Bill to undo the Constitution’s provision for South Africa in its diversity.  Would the Afrikaner community sue an African poet for writing Afrikaans poetry? How would one deal with the Afrikaans-speaking Africans. It was important not to use the Bill as an emotional tool to undermine the Constitution. Mr Marais was actually not completely correct. The legal advisors would have warned the Department if the Bill itself was in conflict with the Constitution.

Ms Line referred to traditional healers. These healers did not want to disclose the particular ingredients of their medicines. Would they be protected by the Bill?

The Chairperson observed that what Ms Line had referred to was like one’s mother’s recipes; one hesitated before sharing them.

Mr Radebe referred back to his initial observation on the risk of a clash between two cultures – between African and Western culture. How ready was the Department to deal with the likely resistance of those who were accustomed to the Western emphasis on individual, as opposed to communal rights? He agreed with Mr Gcwabaza in appreciating and applauding the work of Johnny Clegg. He argued that when an artist or scientist, or anyone, used another person’s, or another community’s material, then that artist or scientist or whoever it was, must acknowledge the original ownership. He referred to Paul Simon. ‘I think he did a wonderful thing.’ Those people from Ladysmith had benefited substantially. There was thus economic benefit from Paul Simon’s adaptation. If the Bill provided for such situations, Mr Radebe would be in favour of it. He then asked about costs and benefits. How much did the Department think that it would cost to implement this Bill? ‘Did they crunch their numbers?’ There was one bill tabled in Parliament which was expected to cost R60 million to implement. However, it eventually cost R500 million to implement.

The Chairperson thought that Mr Radebe’s observation on the cost of implementation was very important.

Mr Njikelana said that the Committee’s deliberations seemed to be pointing to the significance of international experience. From some of the comments made, it might seem as if one was the first to introduce legislation on intellectual property. However, the Department had conducted worldwide research and had detected that the area that it had wanted to cover was something that it must cascade to South Africa’s own experience to ensure the appropriateness of this additional legislation or legislative amendment. On that basis he pleaded with the Department to share its international experience in a more elaborate form than in a PowerPoint presentation. He referred to his earlier question why legislation had been sought to protect moral rights. Secondly, he asked if the Department’s assurance, that benefits would reach the beneficiaries, would be embodied in the Bill or in a related bill. He observed that the way of lawmakers was sometimes quite complex and technical. It was one thing to say that one was protecting intellectual property rights for the benefit of these communities, but it was another thing to say that one must make sure that benefits reached the ultimate destination. A very good example was when some of the intellectual property was vested with the state, or with the community; it had to be asked how the benefits reached their intended destination. The sui generis issue was striking because it made him think what intellectual property was. He asked himself if this form of intellectual property was different from that considered in the general environment of intellectual property. Did it warrant sui generis legislation?
 
Mr Mabaso said that the other way of looking at this Bill was to ask what would be the disadvantages of not introducing it. To value something one sometimes had to ask oneself what would happen if one did not have that thing. Somebody had once said that humankind would only appreciate water when the sea ran dry. As South Africa in particular and Africa in general together with the other less developed countries were taken advantage of by the developed countries, it was incumbent upon us to change our mindset. Even in manufacturing South Africa was always left behind. He thought that this Bill would take South Africa in the right direction. South Africa must become leaders in protecting what was its own. One of the Members had mentioned the Constitution. If the interests of individuals were protected from exploitation, that translated into the national interest. South Africa must jealously as a pluralistic country thank the Department for its efforts. Then it was necessary to assist the Department to exploit all the benefits, and for this reason, asked what would be done to ensure that the downtrodden, who were often ignored, benefited.

Mr Marais observed that Mr Mabaso should be employed by the Department. He asked how, in terms of the process and the terms of reference, the Department justified the costs, and if the benefits would outweigh the costs. Members had heard nothing about the costs. Rooibos tea was the easiest of the examples of intellectual property to be protected. He asked what feedback the Department had received from the Law Society. He offered his support, but asked the Department to concentrate on the issues with which it would have to deal.

The Chairperson said that it was apparent that Members would have to consult very broadly and this had prompted the rearrangement of the Committee’s programme. So many interests in South Africa were at stake. She asked if there was any recourse in this law in regard to moral rights, after rights had been granted, for example, to someone to adapt a folksong, in case the one to whom the rights had been granted ‘ruined’ the folksong. She found the concept of trusts very difficult to understand. She asked if the state would receive funds. She did not see how it would work. As Mr Marais and other Members had said previously, there was need for a workshop, with independent and impartial academic and legal experts to engage Members and the Department further.

The Chairperson asked Mr Radebe to take over for a few minutes as Acting Chairperson. He said that the Department might wish to respond in writing if it was not able to answer all the questions within the time of the meeting.

Ms Ntuli, with reference to Mr Marais’ concern about Johnny Clegg, said that the framework already existing in intellectual property was that if one used somebody else’s work one must recognise that person, and that person even had the opportunity to object. Under intellectual property laws there was the facility for licensing. Medicinal products were an example where there might be voluntary licensing, or compulsory licensing, where, for instance, even if something was the intellectual property of an individual, that individual might be compelled to license its wider use for the public good. For example, the medications for human immunodeficiency virus and acquired immune deficiency syndrome (HIV and AIDS), had become very expensive over the years. One of the issues identified by the Department was that these medications were a monopoly in which the rights to those medications were owned by the pharmaceutical companies concerned. In order to make them accessible to more and more people, it was necessary to allow more licences to be issued to make these medications accessible in order to benefit the general public. There were already legislative mechanisms to deal with some of the issues where the owner held exclusive rights to an item of intellectual property but where it was desirable to license it so that it could be used further to advance certain socio-economic issues. 

Ms Ntuli said that the Department did not intend to reorganise the existing system. As it was at present, any musician who rearranged a song would always be expected to recognise and acknowledge the origins of the song. However, a musician would always claim the right to royalties in respect of his or her rearrangement of the song. That was already allowed under existing legislation.

Ms Ntuli said that the Department appreciated that people might be confused as to how the new Bill might translate into practice. However, the Department wished to assure Members that it was not introducing new legislation to overturn existing arrangements. The Bill rather extended protection to the various aspects of intellectual property that had not been protected previously.

Ms Ntuli said that with regard to benefits in respect of knowledge owned by communities, it would be necessary to have, on a practical level, certain mechanisms, such as the trust proposed by the Bill. The Bill also encouraged the establishment of enterprises that would be vital for these communities to obtain the benefits from their artistic or intellectual creations. In New Zealand such trusts had been established, where the benefits were paid into the trusts and the trusts distributed the benefits to the communities. However, apart from that there were certain cases where the monies could be diverted to certain developmental projects in those very same communities. The benefits could also be paid into innovation funds which were to assist the communities who were to be protected. There were various ways by which the Department could do this. In the Bill the Department proposed the mechanism of the trust that would be established, registered and monitored.

Ms Ntuli said that the Department was also developing the co-operative model and there had been a number of debates at the level of NEDLAC to clarify the mandate of the various structures that the Department proposed to establish. Such debate was to avoid duplication and to ensure that the proposed structures would complement the mandate of the Bill. If there were proposals on how the Department could strengthen that mandate, the Department would be willing to accept them. The report of NEDLAC would be tabled to the Committee.

Ms Ntuli said that the Department wished to ensure transparency in the processes of recognition and registration, but felt that in the existing legislation, there was not sufficient provision for transparency. Indigenous communities would be only too willing to share their knowledge to others who would then go away and exploit this knowledge but not acknowledge its source. Then the indigenous community would not benefit. The registration process, which would be transparent, would allow for these people to be protected when they shared knowledge, even for research purposes, and would allow the process to be monitored and followed through. At present there was not such a process. Even where the Department had thought to introduce it, under the Biodiversity Act, and also under the traditional affairs legislation, it had not related it to IP, since IP legislation had specific processes for recognition of IP.

Ms Ntuli assured the Committee that the Department would provide written responses to any questions that remained unanswered.  The aspects of traditional knowledge and medicine which indigenous communities might not wish to disclose would be respected under the new legislation. The trade secret system did allow someone to keep such knowledge to him- or herself while allowing it to be used by others. The Bill would allow this to continue.  The Department recognised that in its awareness campaigns it must make this clear to the communities so that they did not feel that they would be compelled to disclose certain things. The communities needed to be assured that they were protected by the laws of South Africa.

Ms Ntuli said that with regard to research capacity, the administration of most of these issues would be done through the new Companies and Intellectual Property Commission, which would be responsible for the registration and the maintenance and investigation of these matters. In that case the structure of this new Commission did provide for a research unit to do research in corporate and IP law. The Department had the necessary financial resources.

Ms Ntuli said that the Department had not sought to discredit any model proposed, but the Department had sought to determine if there was a framework within the existing legislation, nationally and internationally, that could be used. Often when one considered an example of sui generis legislation, one found that the protection it provided for a particular item of intellectual property could not be applied to another kind of intellectual property.  At the same time, the Department recognised that the IP system itself was the right system to use. This system, moreover, had been proven internationally. The sui generis approach had been fully explored. However, the Department had concluded that there was more benefit from using the IP system, and believed that this had been demonstrated internationally.

Ms Ntuli said that the Department did not accept the common view that because indigenous knowledge was ancient it was therefore in the public domain. Recognition of intellectual property meant not only payment of royalties, but recognition of ownership of knowledge and that others could not claim the right to it. The Department did not wish to ‘rekindle’ the IP system, but the Department would review the issues raised in the meeting and see what the hindrances were and try to find solutions to those gaps. 

Mr Netshitenzhe, responding to Mr Marais, referred to a song based on an earlier song. The joint-composers of the later song did not own the earlier song, but only the new product – the derivative. It was arguable that the earlier song was owned by the community, while the later song – the derivative – was owned jointly by the composers of the derivative. However, a court had ruled that the composers of the derivative should have given due recognition to the origins of the song. In the case of a well-known singer it was necessary to go to the community and acknowledge that his song came from that community. Paul Simon had acknowledged the community from which one of his own works was derived; and at least acknowledged joint ownership of his work with the originating community.  The Department was not saying that communities should no longer grant permission to enhance the folklore; but the Department was prepared to return to elucidate issues.

Mr Netshitenzhe said that on the other issue of the cultural dimensions, there was an arts and culture council which had met in Pretoria to discuss the Bill and the policy. Representatives of a wide range of communities had been present, and, in the main, had supported the Department’s intentions. However, the Department might require further input from the communities when it came to completing the drafting of the legislation.  Internationally the Department referred to foreign law and the World Intellectual Property Organisation (WIPO). There was at present no treaty, but there was much legislation and much research had been done. In international discussions some claimed to want sui generis legislation, but on analysis one found that they were really talking about the present system of IP. He referred to a document with the reference wipo/grtkf/ic/3/7. It was a survey by WIPO to ask questions about various options. The Department’s analysis of this document was that the respondents were not talking about sui generis but rather about ‘twigging the present system’.

Ms Maseti responded to Mr Mabaso’s question on the purpose of the Bill. He had rightly asked what the disadvantages would be of not having the Bill. This was an important question since when one did the regulatory impact assessment, one had to assess first of all if there was a problem. The Department had made it clear that there were problems. There were problems of the exploitation of the rural communities where commercial undertakings had appropriated the property of such communities, claimed it as their own, and had profited from it without any benefit to the originating communities. The Department had given an example, such as that of a community which would have been unable to win its case without the help of international organisations. That case, in the European Union (EU) had led to the revoking of four patents, and the offending company had not challenged the case verdict. It was important to be aware of the vulnerability of these communities. International agreements might further assist in the fight against ‘bio-piracy’. In another case, a court had ruled that there should be an agreement to share benefits. If there had already been a system to protect these people, it would have been much easier. South Africa had taken a stand whereby IK was considered in national policy. The Department viewed not only protection but empowerment as important.

Ms Maseti referred to Mr Marais’ question about how the proposed legislation would be administered and said that there would be a licensing regime and registration process, but part of that registration process would be a mechanism for verification to trace the identity and location of the community that had originated the item of intellectual property.  If the present system were left as it was, the present abuses would continue. There was no question as to the importance of the new legislation, and such was encouraged by international organisations, which also advocated that such protection should form part of the development initiatives of various countries.  WIPO had fully agreed that IK must be protected, but had not taken the view that countries should protect IK by IP, but that each country should decide which the better approach for it was. The aspects of technical drafting were perhaps something that the Department and the Committee could improve upon.

Ms Maseti referred to Mr Marais’ question about the institutional arrangements for administering the proposed legislation. The Department had defined the institutions. The first was the national council, an advisory body, composed of part-time members, to the Minister on the IK issue. Then there was a trust to receive, safeguard and distribute to the communities. There was also the Companies and Intellectual Property Commission. This had been established in terms of the Companies Act 2008. That institution would deal with enforcement as well as investigation.  There was also an important alternative means of resolving disputes. The Department described this as a system to ensure efficiency and help those communities which lacked financial means and which would involve traditional healers. It had been discussed in NEDLAC. The Department was confident that it could define the roles of the already existing tribunals, and would welcome the Committee’s input. 

Ms Maseti said that the Department regarded the analysis of cost-benefits as an important exercise in quality assurance. It was important to know how the interventions proposed in the Bill were going to affect the people. Therefore it was necessary to consult the stakeholders.

Ms Maseti said she did not have the specific figures of the costs of establishing a database of intellectual property. She said that the Companies and Intellectual Property Registration Office (Cipro) already had a database that might need to be improved.

Ms Maseti said that there was also a database on IK that had very recently been established by the Department of Science and Technology.

Ms Maseti said that it was therefore necessary to have an integrated data base to document IK to facilitate registration, verification, and all aspects of IK. Having done comparisons of costs, the Department could report back to the Committee. The Department did not think that the costs would be significant in relation to the benefits.

Ms Ntuli added that WIPO was working towards a binding instrument for the protection of IK. A previous impasse between the developing and the developed countries on the need for such a binding instrument had been resolved. She noted that the matter of rooibos was far from simple, and illustrated the need for legislation such as the Department was proposing.

The Chairperson alluded to the problems that had been faced by the South African wine industry in its relations with Europe, and said that she could not understand the issue of rooibos. It seemed that others were able to take over such things with impunity, and then South Africa had to fight a rearguard action. She did not understand why South Africa could not take the initiative. These things were South Africa’s. She asked what the legal ramifications were.

Mr Marais said that the wine issue was not something that had arisen suddenly. There were a number of products involved. He spoke from experience since he had been involved in the industry, especially in exports. An agreement had been reached, but the European Union had not paid South Africa money that was due.

The Chairperson said that this was precisely her point. Wines had been taken over in ‘a cavalier fashion’.

Ms Ntuli responded that protection of IK was important for access to markets. When one protected that right, it enabled one to exploit one’s intellectual property to the exclusion of others. From this one moved onto protection of the nation’s resources. The issue of reciprocity came into the picture.  Also involved were educational materials and copyright on books.

Mr Mabaso said that it was not a shortcoming on the Department’s side that it had not answered his question as to what mechanisms the Department had to consult the poorest of the poor. He did not expect the Department to respond immediately. He emphasised that he was referring to rural and urban areas.

The Chairperson said that Mr Mabaso had made a very important point.

Mr Netshitenzhe said that some of the items claimed as geographical indicators did not abide with the definition, for example, champagne. The Gerrmans also wanted to protect their wine. Mexico was an example with tequila. Mexico had even asked that the World Trade Organisation (WTO) link the membership of China with tequila, even though China had proven that for time immemorial the Chinese had grown tequila in China. So tequila could not be a geographical indication. Therefore the Department wanted to abide by international law. However, internationally there was a problem since some other countries demanded exclusive rights to items that they claimed were geographically indicated.

The Chairperson said that she had not realised that China had grown tequila before. These were serious issues. She was convinced that no Member of the Committee or any member of the Department would want to flout international law. However, deciding how ‘to steer the ship’ would be a very difficult exercise.

The Chairperson said that Ms Line’s question on what happened if one did not want to share a secret recipe was pertinent. In such a situation, would the owner of the recipe lose his or her rights to it because some renegade appropriated it? She wondered how Coca-Cola protected its product when the company refused to share the recipe. She understood that the company sent the ingredients in ‘diplomatic envelopes’ for use in other countries. She knew that the Scots felt passionately about a number of issues, such as the kilt and teaching the English the English language.

The Chairperson said that the Committee would call the Department again. She asked for a list of the countries that were pursuing sui generis legislation. This was one of the important issues in the Committee. The Committee would ask others in this regard as well. The Bill brought together three or four pieces of legislation. The Department had just begun to share information and the Committee Members were not all in agreement with what the Department was saying. The Committee proposed a workshop on the subject after 02 June 2010 to which the Department would be invited as observers. The Committee sought an independent, impartial, not corporate, legal advisor. Members were asked to suggest names to the Committee Secretary.

Other business
The consideration and adoption of outstanding minutes was postponed until 26 May 2010. The Chairperson asked Members to ensure that they had read, studied and noted their corrections and amendments to the minutes. The Committee would also meet on 27 May 2010 from 16h00 to 21h00 to complete its report on the Industrial Policy Action Plan 2 (IPAP2).

The meeting was adjourned.


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