Intellectual Property Laws Amendment Bill: Department's response to Committee concerns

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Trade, Industry and Competition

07 June 2011
Chairperson: Ms J Fubbs (ANC)
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Meeting Summary

The Department of Trade and Industry addressed concerns about the Intellectual Property Laws Amendment Bill, and discussed proposed changes. Among the most pressing issues were the constitutionality of the Bill, and the conformity of it to international obligations. The Bill was aimed at protecting indigenous knowledge via copyright, and proposed establishing a national trust fund in order to create a mechanism for the holders of those rights to receive royalties for the use of that indigenous knowledge. Two experts were present at the request of the Committee to provide legal opinion as to the constitutionality and efficacy of the proposed Bill. These advisers raised several concerns about the Bill in relation to constitutionality, international obligations, definitions used in the Bill, and other potential shortfalls. For example, how copyright protection would operate when several indigenous groups might have folklore and music that was similar. A proposal was made by one of the Task Team members for a redraft of the Bill but a decision could not be taken as there was not a quorum.

Meeting report

The Chairperson began the meeting by recommending several news articles for Committee members to read. She noted that the Minister had indicated he could be available on 21 June to discuss interactive gambling. She said that the Committee was pursuing additional advisers for the Intellectual Property Laws Amendment Bill. She introduced Dr J von Braun, an associate at Natural Justice, and Mr J Kindelere, the head of the Intellectual Property Law and Policy Research Unit at the University of Cape Town.

Ms S Van der Merwe (ANC) said that it was nice to have experts present. The task team had gone through the amendment Bill and had posed certain questions to the Department of Trade and Industry (dti). A number of key issues were raised, and the dti provided two documents for discussion. One was entitled “Written Responses to the Portfolio Committee on Trade and Industry” and another entitled “Proposed Amendments for Consideration by the Portfolio Committee.”

She said the task team had had little time to review the responses, but that a number of them did take the task team further in answering questions raised during last week’s meeting. In the new proposal, some of the definitions had been fleshed out. She said they felt there was an improvement in that the fund to be set up would be managed by a trust. There were still a number of questions. For example, there were questions about a number of concessions that had been made by dti that were not reflected in the amendments.

Mr M Oriani-Ambrosini (IFP) said there was an issue of whether the legislation violated international law, and that interaction with the experts was important on this matter.

Mr T Harris (DA) said that he had a problem with the sequencing of the process. They needed to convene a Committee of experts and cross examine dti’s proposals, but he was unsure if enough people in the room had gone through the proposals. The experts should brief the Committee members before such a cross-examination took place.

Ms Fubbs thanked the members for their input, but said that this was not a new piece of legislation before the Committee. She added that the advisers were up to speed on the issues. She wanted a representative panel of experts encompassing gender and race. She would not have “three all male, white advisors for the Committee.”

Mr J Selau (ANC) said that the Committee should understand they were not in a meeting of lawyers, but in Parliament. Therefore, they should ultimately come up with a report that could go before Parliament for adoption.

Ms Fubbs asked dti to begin its presentation.

Responses to Committee on Main Issues Raised about Intellectual Property Laws Amendment Bill
Mr MacDonald Netshitenzhe, Director: Commercial Law and Policy, Consumer and Corporate Regulation Division at the dti, said they were dealing with living documents that were subject to change. He said he would go through the responses in general terms, raising the main issues.

The first issue raised was that the Bill contravened the Constitution. The dti disagreed, stating that the reading of section 25 of the Constitution contemplated a situation of expropriation and the Bill did not seek to expropriate. Secondly, the Bill would impact on existing rights to the extent that when it came into effect, it would require those using folklore of a particular community to pay royalties to that community.

Another issue was that the Bill was contrary to international obligations that South Africa had to honour. In short, there were many international treaties in the world, but it was not necessarily true that SA was a member of all those treaties. The dti needed to take a stock of which treaties South Africa would have the potential of contravening.

There was also a concern about reciprocity, which would allow two nations to make agreements on the enforcement and protection of copyrights. The dti was prepared to be advised on which other international treaties South Africa would contravene with the Amendment Bill, so that Parliament would not be misled.

The next issue dealt with whether copyright protection of indigenous knowledge (IK) was workable. The dti said yes, copyright law could be used to protect IK. Other countries had used copyright regimes, including Tunisia, which he said was the first country in Africa to use such a regime. Such a proposal would take into account the WIPO/UNESCO model legislation. WIPO generally promoted that developing countries used copyright law for this. The French colonies in Africa generally used copyright regimes to protect IK.

Next, the dti disagreed with concerns that collective ownership was not possible. Collective ownership was permissible in other areas of property law, and
Intellectual Property (IP) should not be any different.

Discussion
Mr Oriani-Ambrosini said he had two issues to raise, and that the Committee needed to deal with issues pertaining to the law as lawyers. The two issues determined what Parliament would be able to do, because it could not violate the Constitution or international obligations.

When the Bill passed, groups would need to pay a royalty, which would go to the state. This felt like an expropriation, because those groups would be losing a right.

Ms Fubbs asked Mr Oriani-Ambrosini to be concise in his questioning.

He responded, asking for a proper legal opinion on the matter. The second issue of constitutionality was not addressed. He suggested that because the payment for using protected IK would be made to the state, the payment could only be characterized as a user tax or a levy. He wondered then why this was not a money Bill.

On the international obligations, he said that the Bill violated international law. The advice the Committee received from experts was that there were violations. He wanted a proper legal opinion on this issue as well.

Ms Fubbs asked Mr Oriani-Ambrosini to stop, because he was not asking any questions or seeking clarification. The time for discussion was coming.

Mr Oriani-Ambrosini continued to discuss his concerns.

Ms Fubbs reiterated her position, again asking him to “ask the question.”

Mr Oriani-Ambrosini said that the issues were complex, and that he could not shortcut the complexity because she wanted to do something without the complexity. He asked if she wanted him to “ask silly questions to get silly answers.”

Ms Fubbs said no, and that if he did so, she would rule him out of order.

Mr Oriani-Ambrosini said he was going to try and ask meaningful questions.

Mr N
Gcwabaza said he would like to be made part of the meeting, and that the meeting should not be dominated by a single person.

Ms C Kotsi-Ramotsamai (ANC) said that she did not foresee any situation where the parliamentarians would bypass issues of constitutionality.

Mr J Smalle (DA) said that he did not want to go too far into the document, and that he too wanted a legal opinion at that stage for clarity.

Mr Oriani-Ambrosini said that he was concerned about the “subjectivity of the owners.” He wanted to know who received the royalties and in whom the rights to the IK would vest.

Mr Harris said that he had five small concerns. First, there was no amendment to reflect that the Berne Convention was not abided by. Second, the list of amendments did not include one on equal treatment. Third, he wanted to know if they would prevent international use of the IK works. Fourth, he suggested that the Tunisian example raised by the dti was inaccurate. There, the country added a clause to the copyright law where if a work was based on folklore, then whoever owned that copyright as an individual had to make a payment to a fund. So it did not actually do what the Department said, because the copyright remained in the name of the author, not with a group. Finally, he wanted additional clarification on whether or not the Bill was a money Bill.

Ms S Van der Merwe said that because the documents they received were new, they did not have time to go over any changes. They should allow the Department to proceed with their argument, because one of the questions raised in the task team was that in some instances it was unclear what the argument was behind the decision of the dti to agree or disagree with something. The second point she wanted to make was that the amendments should reflect any concessions made by the dti.

Ms Fubbs said that the Committee needed to flag the issues for the task team and if necessary, once they had heard the responses, to see whether or not it would be possible to meet briefly at some point. It would be useful if there were three core issues flagged, to at least address them in the task team meeting.

She wanted to get through the present documents. She asked to complete this process so at the end of this meeting the Department would have an idea of what issues the Committee was grappling with.

Dr Johanna von Braun, an
Associate at Natural Justice, wondered whether the dti had had a chance to look at the UN Declaration on the Rights of Indigenous People for potential conflicts in the Amendment Bill. That declaration made a clear reference to the rights of indigenous people to hold, maintain, and control their intellectual property. As she understood it, some of the amendments would lead to the rights being either partially or fully held by the trust rather than by the community.

The issue of who held the rights went against the principles of the sister legislation that had been developed in the Department for Environmental Affairs with respect to traditional knowledge and biological resources. There, the rights were maintained with the communities.

Finally, with respect to international agreements, she said that there was an active group under the World Intellectual Property Organization (WIPO) that was in the process of drafting text on the international protection of traditional knowledge and traditional cultural expression. South Africa was an active member of these negotiations and a lot of what would be in that text would be presented at the General Assembly in September of this year. She suggested that it would be worthwhile to hold off with respect to finalising the amendments to make sure they would not contain conflicts with what was being agreed upon by WIPO and amended later on.

Prof Julian Kindelerer, H
ead: Intellectual Property Law and Policy Research Unit, wanted to clarify an issue regarding the perpetual nature of copyright held by the state. Section 5 of the Copyright Act stated that if a copyright was held by the state, it would exist for 50 years from the date of first publication.

Mr
Netshitenzhe resumed with concerns about the definitions in the Bill. The dti agreed that the definitions in the Bill were problematic and in need of improvement, and there were proposed amendments to the definitions.

Another concern was that the IK vested in the National Fund, which had no juristic personality. The dti agreed that this area needed further clarity to reflect the intended role, status, and functions of the fund. The trust would be the body with a legal personality, either as a government or community trust, or a cooperative.

Another issue raised was whether the current IP system or a sui generis system would be used for IK.
These amendments dealt with the work of the mind, which was exactly what IP sought to protect. The dti was not approaching this issue with sui generis legislation.

Regarding a national database for recording IK, he said there would be a concession, which was not yet reflected well in the proposed amendments to the Bill. He added that further clarity was needed to distinguish the role of the national database for recording IK. The IP database should not allow persons to take knowledge from the public and claim IP without prior informed consent.

A concern was raised that the Bill lacked a dispute resolution mechanism. The dti did not agree that there was no dispute resolution mechanism. The dti saw a need to create alternative dispute resolution mechanisms for the indigent as the existing Alternative Dispute Resolution system might not be accessible for owners of IK, and it might be costly.

Another concern was that IK could not be protected using the IP system, and that South Africa should follow what WIPO was doing. South Africa had participated in WIPO, but there was nothing to stop it from developing its own Act. Parliament could always amend it latter if necessary.

Mr
Netshitenzhe said that the Bill adequately dealt with the protection of Geographical Indications (GI) as per the TRIPS minimum standards.

On cross-border community issues, the dti acknowledged that Parliament could not legislate extra-territorially. There were other avenues outside the IP system that could be explored on this issue.

A concern was also raised about the non-representation of traditional leadership in the National Council. it was proposed that the Bill be improved to recognize the role of traditional leader structures in the identification process of communities.

Regarding the collecting societies and the distribution of royalties, Mr Netshitenzhe said there should be a clause regulating collecting societies dealing with IK.

A concern was raised that the non-coordination amongst government departments on matters of IK created confusion for stakeholders. The dti agreed that the Bill showed that coordination was a problem within government departments.

He next discussed the issue of the format of the rules. No IP would be claimed that was governed by the National Heritage Resources Act. There should be a clause that there should be a body that protected IK internally and internationally. For example, in India there was a body that protected IP emanating from traditional knowledge, nationally and internationally. In South Africa, that had not existed, and the dti said there was a need to have that body to defend South Africa’s intellectual property.

Regarding the alienation of the IP and IK, the government expressed its desire to prohibit this. The proposal reflects the inalienable nature of IK.

While some concerns have been raised about the requirement that a copyright be limited to written works, the dti said that was not the case under the WIPO/UNESCO model legislation.

With the unilateral declaration of geographical indicators, dti did not put anything in the Bill, but there was a good example from Mexico, which protected Tequila. The dti would need to come to the Committee with something about how Mexico had done it, and to see if the Minister could do similarly in South Africa.

Mr Netshitenzhe concluded by stating that the Bill should be in line with treaty agreements and the National Treatment principle should be observed. Where possible, the principle of reciprocity under the Performers Protection Act should be recognized.

After a break for tea, the meeting continued. Chairperson Ms Fubbs was unable to be present, and Mr Gcwabaza became the acting chairperson.

Mr Oriani-Ambrosini began the discussion, stating that he did not want to ask any question in this meeting that he would be able to ask on Friday at the task team’s next meeting.

Mr Harris said that while everyone agreed that experts were needed on the technical matters, the Committee was doing a disservice to the other experts who would advise the Committee and who were not present.

Mr Smalle said that the Committee needed to clarify if it was using an IP system or a sui generis system, because it had not made an official pronouncement on the issue. Such a decision would help the formation of the Bill.

Mr Selau wondered why they had not yet heard from the experts, yet the Committee was calling for more experts. This could become “disastrous” if every political party in this parliamentary committee meeting wanted to bring in experts, each with a different opinion.

Mr Gcwabaza responded by stating that the parties had a right to call experts whenever they wanted to. But these experts were people the Committee decided should consult the entire Committee. They wanted a situation where the experts could consult everyone, regardless of party.

Ms S Van der Merwe said that she understood the management committee had decided on requesting the presence of the two people that were at the meeting. Due to the complexity of the Bill, and because of the variety of expertise that was needed, they might need a diverse panel to provide expert opinion.

She also suggested, because of the length of the documents and the recent changes to the proposed amendments, that the Committee proceed in a concise manner in order to see where there were still gaps, and to see how they could proceed further.

Mr Gcwabaza said questions of clarity would be allowed soon, and that they would be moving on to the second document.

Mr X Mabaso said that any amount of time used in further work on the document was of critical value.

Proposed Amendments for Consideration by the Portfolio Committee
Mr Johan Strydom, dti legal adviser, presented the proposed amendments. There were four principal Acts of Parliament, all of them dealing with intellectual properties, which would be amended by a single Bill. He referred to the proposed amendments as “Document 2.” He would refer to all the proposals, but would deal more in depth with those amendments that had more substance to them (see attached document)

Discussion
Mr MacDonald Netshitenzhe thanked Mr Strydom. In Document 2, some issues not addressed, such as the concerns raised about the involvement of the House of Traditional Leaders.

Mr Selau asked which clauses referred to which Acts. The reference titles could have been simpler. He asked for clarification about the amount of the royalty and how it would be determined.

He asked who owned the intellectually property – the performer or owner of the studio.

He also wondered if it was constitutional to require people to go to dispute resolution prior to going to court or arbitration.

Mr Smalle said that apart from the constitutionality concerns, there was a transfer of IK, and he wanted clarification on that issue. He wondered if there was shareholding between different groups, and about how a copyright would follow an individual who moved between indigenous groups.

Ms S Van der Merwe said that the Amendment Bill had been before them for some time, and that the Committee’s obligation was to make a recommendation to Parliament and to pass the Bill in the best possible way to protect indigenous knowledge. She suggested that the Committee consider a redraft of the Bill, and that they form a small committee to oversee a redraft. They did not want a piece of work that was difficult for an ordinary person to read and understand.

Mr Gcwabaza said it was now time for questions of clarity, and time to bring in the experts to make observations on the Bill.

Mr Harris supported the proposal for a redraft, and said that the core of the group charged with the redraft should be made up of the task team that had been working on the details of the Bill.

Mr Strydom said that the Committee should receive a legal opinion as to the constitutionality of the Bill. If a right was vested and had been in existence for an extended period of time, then there was something sacrosanct about that right. By law, it could not be curtailed or limited. There was just one such right – the right to life. Until recently, there were a number of people that had vested rights in respect to water and minerals. Those had been in existence for possibly centuries, but they had recently been seriously curtailed or limited by legislation.

Regarding the requirement to go to a new institution for adjudication, he said that an individual would not lose the right to approach a court of law or to go to arbitration. The proposal just said that before exercising one of those rights, an individual would need to go to the new institution for purposes of adjudicating matters related to the Act. It would cost little or nothing for the parties, because counsel would not be present, and the only requirement was that the parties go to this institution first. If a party was not satisfied, they could go to court or arbitration. This was important, because many people would find it difficult to approach a court of law because of the cost involved.

Mr Strydom then addressed how the parties determine the amount of the royalty. This would be based on agreement between the user of sound recording, the performer, and the owner of the copyright. The principle was to make the agreement as inclusive and collective as possible.

Dr von Braun said that on the issue of owners’ rights, it was critical and unclear in the proposals. She wanted to know if the community would have the ability to exclude groups from using the material.


On the definition of indigenous community, she said it should include multi-ethnic identity groups, and communities that collaborated with other communities on works of art.

She also wondered whether a third party would have access to the national database, and to what extent third parties had the obligation to obtain informed consent regarding protected works of IK.

She also wanted to know where the royalties would go – either to the specific communities or the communities generally. Having a geographical indicator for IK might be difficult, because the communities would need to demonstrate a tradition of production tied to a certain area.

it was important to acknowledge that IP rights could only protect a small fraction of IK, and that the proposed Bill could not be the only instrument to protect IK.

Prof Kinderlerer said that he did not understand the new trust, the trust fund, and the responsibilities. It seemed like the IK should be owned by the communities. The trust fund should act as a safety net, which would not allow for identification of the owner of the IK. It should facilitate ownership by communities that would be able to do it by themselves. He believed that it was wrong to have the state own the IK and then collect the royalties. In addition, there was no indication that those royalties would be returned directly to those communities.

Second, Mr Kinderlerer asked about the purpose of the databases. He suggested that one was defensive – to ensure that someone from outside South Africa could not register IP which was already known to be owned by someone here. For example, Indian and Chinese databases provide access to the US and European patent offices to ensure those offices knew of any registration.

Regarding collecting societies, he wondered why they were mentioned when the Minister had set up a commission to look into the operation of collecting societies. Changes to these societies could be forthcoming in the next few weeks.

Finally, he raised the issue of an overlap of IK. Communities might have had almost exactly the same folklore and music. In those cases, the use by one community to something almost identical to another community would require one community to pay royalties to the other, simply because one registered first.

Mr Gcwabaza thanked Dr von Braun and Mr Kindelerer for their opinions, and asked for written input as well. Regarding a redraft of the Bill, he said that the principle was acceptable, but there was not a quorum to adopt the proposal.

Mr Harris said that the full set of experts should be present at the next meeting.

Ms S Van der Merwe said that the purpose of a redraft was to provide coherence to the information the Committee had already dealt with, not to open new things that had not been discussed.

The meeting was adjourned.

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