Intellectual Property Laws Amendment Bill: opinion by Parliamentary Legal Adviser & task team reportback

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Trade, Industry and Competition

31 May 2011
Chairperson: Ms J Fubbs (ANC)
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Meeting Summary

Members heard a legal opinion on the Intellectual Property Laws Amendment Bill. There were several problem areas in the Bill. Traditional communities might lose their current rights without compensation. There was uncertainty over the role of the National Trust Fund and how benefits would be distributed. There was no budgetary provision for the operation of the fund. It was not clear what model would be used. There were a number of other areas where the Bill was unclear. There were several cases of inconsistent style and incorrect cross-references.

The Committee had established a Task Team to engage with the Bill. The team reported that a number of amendments had already been made to the Bill and these needed to be consolidated. It might reach a point where the Bill should be redrafted, but this could delay its introduction into the next cycle of Parliament. The Department of Trade and Industry confirmed that it had heard similar complaints about the Bill from other sources.

The Committee discussed its programme for the immediate future. The current Bill required urgent attention but other legislation would soon be passed on by Cabinet. The Committee also had reports from several entities under the Department to consider. Additional meetings might have to be held to get through the programme.

Meeting report

Intellectual Property Laws Amendment Bill: opinion by Parliamentary Legal Adviser
Adv Charmaine van der Merwe, Constitutional and Legal Services Office, Parliament, said she would comment on four issues. She said that current rights would be affected. A royalty would be payable. This implied that the owner no longer had full ownership of the right. This was not a problem as such, but there was no provision for compensation. The Bill made provision for collecting societies as defined in the Copyright Act. Regulations on this Act had already been delegated. There was a duplication of delegated powers.

Adv van der Merwe said the Bill set up a national trust fund. This fund would have to be used for the benefit of various indigenous communities. This was to be done in the prescribed manner, but this manner was not defined. It was unclear what the form of the prescription should be. Parliament should consider if it did want oversight of this process. It was an Executive function. She could think of four different ways to share the money. Shared money was one option and shares a second. There could be no benefit to the community with all the money going to to administration or each intellectual property (IP) right could be registered on its own. There could also be a distinction between the three types of IP. She felt that wording such as prescribed by regulation in consultation with Parliament would be appropriate.

Adv van der Merwe raised some questions about the legal status of the National Trust Fund (NTF). Currently the fund resorted under the new Companies and Intellectual Property Commission (CIPC). She asked if it would not be better if the NTF was a legal person. The Bill was not clear on the specifics of the model to be used. There would be a Council, a database and a fund. The NTF would have some duties. The Bill only dealt with designs, trade marks, copyright and performance protection, but not patents. The model did not conform across the board. Copyright was automatic. This would now vest in the fund whereas trade marks and designs, which had to be registered, vested in the indigenous communities. Furthermore, royalties would be paid into the fund. If the community used the trade mark or design, they would also have to pay a royalty. The council would function as a collecting society if there was no other such society. This was the only case where this would apply. There was a discrepancy about where registration would take place.

Adv van der Merwe said all functions would fall under the CIPC. There were already several role players, but there was no provision for conflict resolution. There was a provision for arbitration using the current system, but she felt that this was insufficient.

Adv van der Merwe said that there could be four different ways in which the fund could pay out. She recommended that the Copyright Act be used as a base. There were a few things that were not clear. The explanatory funding did not talk about funding for the Council, and yet several people would be employed. There would be costs involved. The idea seemed to be that the NTF must pay for itself. There was a question if the income would cover costs. If the fund were to become self-sufficient, it would take at least five years. In the interim there would be many expenses.

Adv van der Merwe said that under the Performers' Protection Act, the legislation said that the Council shall function as a collection agency. She asked if the Council would comply with the related regulations.

Adv van der Merwe had issues with the Copyright Act. There was provision for the Council to be dissolved. She felt that subsection (9) already covered this. The council should have IP records while the CIPC would also be maintaining a register. She thought there would be some duplication. She asked if the Act envisaged any other form of income than royalties. She asked if the fund should be allowed to make investments. There was a question of how the money would flow back to the communities.

Adv van der Merwe said that under the Trade Marks Act, Section 16 stated that if geographical indications were registered, only the Director-General of the Department of Agriculture needed to be notified and not the Council. Additionally, the right would be registered with the Council but CIPC would hold the database.

Adv van der Merwe had a number of comments on the drafting. She suggested that the Committee should consider these remarks when doing the detailed deliberations.

The Chairperson scanned the comments. In once case the word Author was suggested rather then Owner. These were different concepts.

Adv van der Merwe said that the Copyright Act read nicely in places. In the Amendment Bill, the agreement was captured in two subsections. The wording of the Copyright Act should be used. She felt that the word Author had been used incorrectly. No person could author a copyright. This was a case for the use of owner. There were a number of inconsistencies in the style and grammar of the Amendment Bill. Some of the cross-references to the principal Acts were incorrect.

Adv van der Merwe commented on the Designs Act. The current system was using four Acts. There were cross-references. However, amendments to this Act must be able to stand on their own. Section 22(1A) had an anomaly over the time periods. Some matters would expire ten years after the implementation of the Bill.

Mr Oriani-Ambrosini (IFP) congratulated Adv van der Merwe on the concise presentation. He wanted her to expand on some issues. The issue of compensation needed more attention. The right of actual and potential use was being taken away. There had been a similar situation with mineral rights. If all potential users were to be compensated there would be an enormous cost and Parliament should be advised of the extent. There had been a constitutional issue in legislation surrounding local government where Parliament was seen incorrectly to be delegating power but still retaining some control. There was also an issue regarding tagging. He understood the traditional IP rights were those which could not be protected under existing legislation. There were two pieces of legislation covering indigenous communities. The current definitions did not match.

Mr Harris (DA) said that a recurring issue was that of definitions. He wanted a general impression from the legal adviser. Some issues might lead to constitutional challenges. Clause 11 of the Bill changed copyright issues. The issue of confiscation was raised. He was speaking to a lawyer about the regulations, and the lawyer's opinion was that they went further than the legislation. The CIPC had made a presentation. The Commissioner had expressed an opinion that she did not want the Commission to exercise some powers which the legal opinion was they should have. Several areas in the presentation arose from the amendment of four different Acts. During the public hearing process there had been a call for a new piece of legislation to cover the four areas.

Mr J Smalle (DA) said that determining authorship was a complex function, which would make it difficult to determine authorship. Two or more communities might claim the same authorship of a trade mark.

Mr A Alberts (FF+) had been in discussions with party colleagues about what items needed protection which were not already protected. The area of cultural artefacts was a problem.

Mr Gcwabaza (ANC) needed clarity on the issue of the community also paying royalties. He asked if they should be doing so with the understanding that the Fund would play the role of a community development agent for that community. If royalties were to be a tool for development it might create an unfortunate situation of the Council having to make its own call on the disbursement. If the Council was removed from the fund collection process, it would be correct to say that the Council should play an oversight role.

The Chairperson did not want to pre-empt the clause-by-clause deliberations or the report from the task team.

Mr Oriani-Ambrosini asked if there could be provision for the re-registration of a current right.

Adv van der Merwe said that the legislation should make provision for preventing a flood of claims. Future rights would be stopped, but she agreed that there were current problems. There was uncertainty on how the NTF would be used. This affected the tagging of the Bill. One of the big problems was defining what was to be protected. She was aware that current comments related strongly to definitions. The regulatory impact assessment indicated either a hybrid Bill or maintaining current legislation. The Department needed to be clear on definitions. Broader definitions might be needed. Identifying affected communities might lead to disputes. In New Zealand, every community was claiming the Haka war dance as their own. Legislation must provide for what would go into the regulations. She did not think this was generally a problem, but the Amendment Bill was wide open at the moment. She felt that registration should fall under the Council and not the CIPC. This should be resolved with the Department of Trade and Industry (dti).

Adv van der Merwe said they were breaking ground with this legislation. This was not an easy matter. She asked if a new body would be created or if the current registrar would have additional responsibilities. She understood the argument but a focus was needed on what the problems were. It was not impossible to achieve this under the current system. A hybrid bill could deal with everything. The current Bill could be better structured, even merely by the use of headings to make it clear which Act was being amended.

Adv van der Merwe said it needed to be clear what would be done with royalties. If it was simply an issue of using funds for development, the current system could remain.

The Chairperson said that Adv van der Merwe would stay with the Committee during the deliberation process.

Report back by Task Team
Ms van der Merwe said that the task team had met for the first time in the current round the previous day. A number of parties had been represented. Adv van der Merwe and the State Law Adviser (SLA) were also present. It was clear that a lot of work was still needed on the Bill. It did not reflect the issues raised during the public hearings or at the National Economic Development and Labour Council (Nedlac). The team needed to look at a process. The dti should provide the amendments made in response to issues raised to date. Given the wide ranging comments, the Committee might consider redrafting the Bill.

Ms van der Merwe said a number of queries had been raised. The first question was if experts on IP should be approached to assist the Committee. The second question was regarding time frames. She noticed that this issue had been raised. The original time frame of two weeks did not look achievable. She was pleased to see that this had been extended. The World Intellectual Property Organisation (WIPO) process had been reviewed. Her understanding was that the process had not gone far at this stage. Indeed, WIPO was looking to South Africa for a lead.

Ms van der Merwe said that a document had been received of the Bill in amended form. The document captured several valuable issues and should be considered. She asked that the dti should document the amendments and then forward it to the Committee.

Mr Harris supported the request for an amended document. There were already several amendments. There was an option to redraft the Bill. His understanding had improved at the meeting the previous day.

Ms van der Merwe said that more amendments would be received. If these had more substance than the Bill itself then a redraft might be better. However, if the Bill was withdrawn it might only be resubmitted in the following parliamentary cycle.

The Chairperson said that the intent should be to engage with a Bill on an organic basis. However, the point might be reached where redrafting was more of an option. The Committee had already decided to employ consultants and some names had already been put forward. She mentioned some leading experts, including academics and figures in the industry. They wanted to consult with such people but there should not be the slightest sign of those who were directly involved. Copyright might be a difficult field.

Mr Harris said that the University of Cape Town (UCT), his alma mater, had many experts at their disposal but were not the only experts that could be consulted.

The Chairperson said that a decision was needed as soon as possible. The Committee had already decided to consult with Dr von Braun. The curriculae vitae of the consultants would be distributed. Matters would be referred to the task team as they came up. While a core team had been identified, all Members were welcome to attend their meetings.

Mr B Radebe (ANC) felt that the task team should be commended for the work done already. The list of consultants should not be closed. The dti should indicate the amendments with which they were comfortable.

Ms Zodwa Ntuli, Deputy Director-General, the dti, said the mandate was clear. What they had heard was consistent with what they had heard elsewhere. They would upgrade the document.

The Chairperson acknowledged the pressure on the dti. The task team met on Tuesdays and the presence of the dti would be welcomed. It seemed that the Committee supported the strategy put forward by Ms van der Merwe.

Committee Programme
The Chairperson hoped that the programme was now more concrete than ever before.

Mr Gcwabaza said that the meeting scheduled for 3 June had been moved to 10 June to allow Members to do other parliamentary work. The Management Committee (MANCO) felt that the programme should be flexible, but no more than two Friday meetings per month should be scheduled. The deliberations on the Amendment Bill would be more spread out. Secondly, there were more days set aside for deliberations on the Bill. Three possible dates had been considered for the debate in late August. The oversight visit scheduled for July had been brought forward. This would take up some constituency time. It was now scheduled for 18-22 July. MANCO was still considering a study tour. Candidate countries included Germany, Brazil and Kenya.

The Chairperson was aware of the Gambling Regulations report. These were being tabled before Cabinet at the time and would be reviewed by the Committee. Members would only be able to apply their minds to this in August. The Budget Review and Recommendations Report (BRRR) would be under constant review.

Ms van der Merwe asked if the dti would be able to provide amendments to the Bill by the next meeting of the task team, scheduled for 7 June.

Mr MacDonald Netshitenzhe, Chief Director: Policy and Legislation, the dti, said something would be prepared.

Mr Harris asked if there would be a problem if the study and oversight visits impinged on constituency time.

The Chairperson said this was acceptable given the amount of legislation it still had to deal with. The draft programme had been approved. Committee meetings were only held on Tuesdays in exceptional cases due to Members' commitments with other Committees. Members should be aware that meetings could be held all day on Fridays and even on Saturdays. The Companies Bill had run into a pressure of time. This Committee could only hold oversight visits once a year, and held its external meetings in this period. Other Committees had been on three oversight visits already during the year. She called on fellow Members to speak to their political principals.

Mr Oriani-Ambrosini said his other Committee, the Portfolio Committee on Justice and Constitutional Development, was also working on four Bills. When problems were encountered with one Bill they were flexible enough to work on another Bill in the meantime. He suggested that this Committee work on other Bills in parallel. He accepted the Chairperson's point that the Estate Agents Act was thirty years old and needed attention. Members could meet on Mondays, Fridays and Saturdays if necessary. Some real oversight was needed in the banking and insurance industries. The country had been seized by the Walmart issue. He realised that the matter had been moved to another portfolio, but the Minister of Trade and Industry had taken a leading role in the process. He felt that the Committee should meet with the Minister.

The Chairperson said that the Committee had been dealing with the gambling regulations since 2009. Other legislation had not yet been tabled, but were on the horizon. It might be a waste of time to deal with some legislation that might be delayed considerably. It would be prudent to deal with the most pressing legislation and wait for the others to be tabled. IP would remain the core focus, but time frames might have to be expanded. This is why only the core business was reflected on the draft programme. Mondays were a political day in Parliament, and this was owed to the constituents. Friday, however, was a working day and should be used judiciously. Cabinet would be deciding on the Co-operatives Bill within the week.

Mr Oriani-Ambrosini said there was a rumour that the Chairperson was a slave-driver. Extra meetings could be added to the draft programme. He proposed that one of three meetings be kept open for legislative work. This should forestall the need for emergency meetings. If there was nothing on the agenda then minutes could be approved.

Mr Gcwabaza said that two Fridays would be used, but this was not cast in stone. Additional Friday meetings could be called.

The Chairperson said she did not believe the Chair of Chairs would approve of a blank cheque on the schedule. Some scope had to be left for attendance of other Committees.

Mr Harris said the planning was sensible, but he had another problem. The dti were to present thirteen reports, and these all had still to be considered by the Committee.

The Chairperson felt that every Friday should then be reserved for meetings, even if some did not last all day.

Mr G Selau (ANC) did not know why his comrades were uncomfortable.

The Chairperson said that the banking issue could not be overlooked. The Walmart issue still had to be investigated. The Committee respected the decision of the World Trade Organisation (WTO). In a sense, Walmart fell into this situation. The Minister had made it clear that local industries must not be undermined. Employment must be grown, not cut. She understood that the conditions imposed on Walmart would address WTO requirements. In many ways, it must be up to the Committee to see that the conditions were met. Parliament represented the four corners of the country, and in some cases the corners were difficult to reach. This is why Monday was reserved for constituency work and Members should be present at Parliament for the other days. She did not want to see the programme changing every week. Time would be made to hear the reports on Fridays, when the Minister should be available.

Adoption of Committee minutes
The Committee adopted the minutes of the meetings of 13 and 14 April 2011 with amendments.

The meeting was adjourned.


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