Intellectual Property Laws Amendment Bill: Clause 53A, Registered proprietor provisions, further discussion

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Trade and Industry

14 September 2011
Chairperson: Ms J Fubbs (ANC)
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Meeting Summary

The Chairperson summarised that the Committee, through this Bill, was seeking to ensure protection for indigenous knowledge, and urged Members, as they entered the final stages, to check that the final product correctly reflected the Committee’s intentions, did not lead to any unforeseen consequences or absurdity and was not contradictory.

The legal drafters indicated that they had considered the various concerns on the requirements around registration, which were discussed at length on the previous day, and especially the possibility that compulsory registration could be such a hindrance that indigenous communities would not be protected, whilst at the same time recognising that the lack of a registration process and certainty might dissuade investors and not meet the requirements that laws should be clear and precise, as well as avoid inconsistency with other pieces of legislation. It was clear that the Department of Trade and Industry (dti) would have to do a lot of groundwork in sensitising and educating indigenous communities. The dti had pointed out that the formal registration process provided an objective and certain procedure for determination of what could be registrable, which would be to the benefit of communities. The drafters now proposed a “middle-road” approach, to the effect that the Bill should now set out a window period in which indigenous communities “may” register, and would be encouraged in fact to do so. If they did so, within this period their rights would be protected and they would be entitled to claim a royalty or benefit share from date of commencement of the Act. After this time, they could still register, but then the royalty or benefit claim would run only from date of registration. A period of 36 months was suggested, with the possibility of the Minister being able to extend it by proclamation.

Members generally thought that this proposal was an improvement, although the DA still noted its objections and maintained its stance that registration should be a prerequisite to protection of rights, in line with the existing Designs Act and Trademarks Act. All Members were in agreement that communities’ rights must be recognised, urged that the anomalies and inconsistencies apparent in previous rights claims should be avoided, and stressed that people should be encouraged to register. One Member queried whether it was necessary to put the time periods in the Act, but the drafters responded that this would act as a useful spur to the dti, and that this was recognised as a “temporary” provision to fill a lacuna in the law. Members suggested that in addition to proactively visiting communities, and producing a comprehensive communication plan, the dti should compile indicators of what constituted indigenous knowledge. They discussed whether it was equitable to require a backdating of payments, but the drafters stressed that this was not the same as retrospective application of the law. A DA member cautioned that it should not be assumed that all derivative rights users were wealthy and a requirement for a profit share, backdated 35 months, might prove so onerous that it could effectively make the rights holder insolvent. The drafters noted that they would need to consider these points further, although there were alternative dispute resolution processes, and it was likely that considerations as to all parties’ circumstances would be fully taken into account.

The Committee started to consider the clauses, and Members were asked to indicate where changes might be required. However, time constraints prevented the Committee from proceeding further than clause 3. The presentation on the Preamble was to stand over to the following day. A DA Member noted his party’s position, stating that his party was opposed to proceeding with voting on the following day, feeling that not all concerns had yet been adequately addressed, felt that the Bill should be referred to the National House of Traditional Leaders, and urged that the revised Bill, with so many substantive changes, should again be subjected to a public scrutiny process. The Chairperson noted that the voting would be canvassed with the Committee on the following day. She cited the legal opinions obtained, which expressed the view that there was no necessity to refer the Bill, and said she was happy that the Committee had followed due and correct process. The meeting would be resumed on the following day.

Meeting report

Intellectual Property Laws Amendment Bill: Further deliberations
The Chairperson, by way of introduction, noted that this Committee would need to check the latest version of the Intellectual Property Laws Amendment Bill (the Bill), to ensure that it correctly reflected the Committee’s intentions, did not lead to any unforeseen consequences or absurdity and was not contradictory. The Committee wished to ensure protection to indigenous knowledge as a natural heritage, and it was important that communities and individuals should be afforded the same protection as applied to “mainstream” intellectual property, across the world. The Committee had made great progress, but there were still some concerns, as had become evident during the meeting the previous evening.

Clause 53A
Adv Charmaine van der Merwe, Parliamentary Legal Advisor, reminded Members that on the previous day some Members had expressed concerns about whether designs would have to be registered, in order to confer protection on indigenous communities. This was not something that was incorporated into the Committee’s policy framework, although the Bill, as introduced, had required registration. The drafters had thought that part of the protection afforded to indigenous communities was the right, rather than the obligation, to register. That was why the Committee had chosen not to adopt a sui generis system, but rather to adopt the strengths of the current legislation. However, on the previous day several Members had expressed their concern that the requirement of registration could in fact prove a hindrance to indigenous communities. Further proposals were then made to try to address this, although those also did not satisfy all Members.

She noted that these proposals would require the Department of Trade and Industry (dti) to do a lot of groundwork in sensitising and educating indigenous communities. If some system was not found to protect communities and record their rights in some way, communities might equally find it very difficult to achieve full protection of their rights in practicality.

Adv van der Merwe pointed out that part of the building of the dti campus in Sunnyside included a winding river-design, and she pointed out that this was in fact a direct copy of something from the Mapungubwe community. However, if nobody knew of this, because communities never notified the Companies and Intellectual Property Commission (CIPC), the communities might actually be at a disadvantage.

The drafters had heard the concerns of Members and now wished to propose something that took a middle approach. They had initially considered whether the Bill should state that registration could be possible for indigenous designs, but then realised that this still raised the question of how communities would know that they should register. The drafters therefore now suggested that the Bill should set out a window-period – and the suggestion of 36 months was given –for registration. This would make the role of the dti even more important. If the indigenous communities registered within the window period, they would be able to obtain protection, backdated to the date of commencement of the Act. If they did not do so within this window period, they would not be precluded from registering at any time thereafter but in this event would only get the protection from the date of registration forward.

The Department of Trade and Industry (dti) had also pointed out that, in order to be registered under the Designs Act, certain requirements must be satisfied in each of the categories of functional or aesthetic. A further point to be taken into consideration, therefore, was whether communities would know of these requirements. Currently the registration process provided for an objective way in which the designs would be assessed by the trained Registrar. Legal certainty resulted from this objective process. If a design was to be “automatically” accepted without any need for registration or recordal, then there was a possibility that a community may think that it had a registrable design, when it did not, or did not bother to register because it believed that the design did not fulfil the requirements, although in fact it might. For this reason, the drafters suggested that this reference to a window period should also be inserted into the Designs Act and the Trademarks Act.

In regard to the window period, she suggested that if the dti realised, at some stage within that period, that if would not be possible to reach all communities, there should be a provision allowing for an extension. It was possible to insert wording such as “a period of thirty six months or such further extension as the Minister may prescribe”.

Finally the drafters noted that this window period and interim process was in effect a compromise to try to recognise and deal with the special situation, but that at some stage, legal certainty should be established, where a registration process might be required.

Discussion
Ms S Kotsi (COPE) asked whether there would be protection if the community knowledge was not registered. From the previous day’s discussion it had become clear that something was needed to protect the communities. She wondered if it would not be possible to include a reference still to “recordal”. She had expressed her concerns on the previous day about the anomalies and inconsistencies that had arisen with land restitution. She stressed that communities should not be deprived of benefits if they had not registered.

Mr G Selau (ANC) said he had made a similar suggestion on the previous day. The ANC was not fundamentally opposed to the principle of registration, but was very concerned that the understanding of indigenous communities should not be assumed. It was necessary to change mindsets and protect rights, and he had mentioned the need to encourage people to enter the system and own the process. He suggested that perhaps no set period should be inserted in the Bill, but that perhaps the regulations should specify that deadlines must be given and reviewed. He pointed out that transitional provisions in respect of transport legislation had not been met within required periods. Finally he stated that the Members’ views were not widely divergent and all were concerned with addressing the need to protect indigenous communities’ rights.

Mr X Mabasa (ANC) said it was important to learn from previous experiences and challenges. He pointed out that the difficulties with registration were evidenced by the number of people still who did not have identity documents. He agreed that it would be useful to include a cut-off date as an incentive, to encourage people to register, in the interests of good administration. Hopefully the numbers of those falling outside the formal systems would reduce every day. He asked about the practical effects of trying to ensure that no pre-existing rights were lost.

Mr J Smalle (DA) said that a register could take the form of a database or a recordal, but would essentially be a historical source that would be held by the dti. The Departments of Science and Technology, and Arts and Culture had already spearheaded the protection and consolidation of indigenous knowledge. He noted that whilst it was necessary to protect the rights of indigenous communities, there should also be protection of the rights of entrepreneurs wanting to use indigenous knowledge. There had to be certainty and safeguards. The Bill currently protected indigenous knowledge, and the role of dti would be very important. An entrepreneur who had followed all the other steps, such as notification to the Commission, seeking permission from the community and entering into a benefit-sharing arrangement, would eventually end up at the dti’s door. He suggested that the dti should compile some indicators or markers of what constituted indigenous knowledge. He agreed that in principle, there should be a fixed timeframe, and people must be advised of it.

Mr Smalle said that he was rather worried about the potential economic effect, upon the registered proprietor, of backdating the benefit sharing. He also added that another risk might be the possibility of some knowledge becoming extinct.
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The Chairperson pointed out that if an indigenous community’s right was not registered, within the time limit, then benefits would accrue only from the date of registration.

Mr T Harris (DA) noted that this suggestion seemed, at first sight, to be an improvement on the proposal put forward on the previous day. However, he reiterated again that in terms of the current Designs Act and Trademarks Act, the benefits of registration would apply only once registration had occurred. He agreed that it would be useful to prescribe a time period, because this would spur action by the dti, and he thought three years was a reasonable period.

Mr Harris gave his understanding that a trademark had to be used regularly, in the course of trade, so it could not simply be registered and then left to “sit”. He asked how that would operate in relation to a community. He thought that if this was so, then the period of three years for a trademark might be too long.

Adv Johan Strydom, Legal Advisor, dti, said that section 9 of the Trademarks Act, dealing with registrable trademarks, did not in fact require that the trademark had to be used continuously in the course of business.

Adv A Alberts (FF+) thought that this was a good compromise, but thought Members needed to discuss the time period of 36 months, as he would not be in favour of extending this. He agreed with Mr Mabasa’s comment that government and the State had a constitutional responsibility to make the people aware of their rights. He agreed that the dti should be obliged to come up with a comprehensive communication plan, and ensure that problems of missing the deadline, as mentioned by Ms Kotsi, did not occur.

Adv van der Merwe confirmed that currently, in terms of the Designs Act, a design would not be protected unless registered. However, there was a lacuna in the law. A way must be found to commit something to writing, to create certainty. During the window period, communities should register, and in that period dti would have to send out fieldworkers to identify designs on behalf of communities, and to encourage people to register in order to enjoy the protection. The drafters were aware that in the short term, the attempts to fill this lacuna in the law would create some uncertainty, but this was necessary to address the protection of communities. She stressed that the window period would be a defined period. After that, the normal registration requirements would apply again. In answer to Mr Selau’s suggestion that perhaps the window period not be specified in the Bill, she said that if it were put in the Bill, it would serve as a strong indicator to dti, but a further safeguard could be that the Minister could be given the power to extend the operation of the window period if necessary.

Adv van der Merwe explained that even if a community registered its design in month 35, the protection would run from day 1 (the date of commencement of the Act). However, if a community, despite having being encouraged to register, had not thought that it had a design, or perhaps did not discover a design until it was conveyed by an elder after that 36 months had expired, it would still be able to register the design in month 37, and derive a commercial benefit from it from month 37 onwards (date of registration). This was unlikely, from a practical point of view, to cause any hardship because if a design was unknown even in the community, then it was unlikely to have been known or exploited elsewhere.

In respect of the recordal comment by Ms Kotsi, she noted that originally the drafters had combined the register and database, because the dti suggested that a database could be less bureaucratic.

Mr T Harris (DA) said that he was struggling to understand how this would work in practice. In terms of clause 53B the right would vest only when three conditions had been fulfilled: namely, disclosure to the Commission, consent of the community and agreement with the community on profit sharing. If, however, a registered proprietor might be using an Ndebele design, and the Ndebele indigenous community registered their design in month 35, neither the consent nor permission could be backdated, but he wondered if the benefit sharing agreement, signed in month 35, would have to share benefits accruing over the preceding 35 months.

Adv van der Merwe said that it would. Once the design was notified, the benefit share would apply from date of commencement of the Act, up to date of notification, and of course in respect of any future benefits. All those aspects would then come into play. She pointed out that a person using a well known design would in fact benefit from approaching the community and encouraging them to register. If the community then failed to do so, but subsequently claimed benefits, the court would take into account when the notification was given by the registered proprietor, and would be unlikely to find that the registered proprietor had acted mala fides, so no punitive damages were likely to be awarded. She emphasised that nothing in this Bill was attempting to criminalise actions or inaction, and the Bill only allowed for civil claims.

Ms Kotsi said that the legislation must also address those who did not want to share benefits with indigenous communities. She asked if the Court was likely to take into account the fact that the community had not registered until month 35.

Mr Mabasa asked whether, if the Bill did not include a time limit, the indigenous community owning them would be entitled to claim indefinitely far back.

Adv Alberts pointed out that the rules of interpretation required that obligations should not be imposed upon people retrospectively. There was probably Constitutional case law around that. However, this proposal suggested that a business person, who had done due diligence, and was using a design under the genuine impression that no one else had a prior claim to it, could find himself in the position of suddenly having to pay royalties for the previous 35 months. He suggested that this was not only inequitable, but possibly also unconstitutional. He would be more satisfied if the sharing of royalties were to apply from communication date or registration date, whichever was earlier.

Adv Strydom said that Adv Alberts had set out a correct principle. However, a retrospective application of a law would be permissible, if it was to the benefit of those affected. It would not be permissible if retrospective application would result in prejudice. He noted that nothing in the proposal was suggesting that royalties or benefits would be paid prior to the date on which this Bill came into operation as the new Act. However, even that situation might be inequitable to the indigenous community, because they would not have derived any benefit from the past commercial use, perhaps over many years, of their design. However, only the date of commencement of the new Act would be important in this context. From the date of commencement to month 35, the indigenous community’s right to claim that design as its own would be in existence, and should be protected by payment of a benefit from that date. The word “retrospective” was not correctly used; in fact the right was recognised from commencement but the payment of benefits could be backdated to commencement. After the 36 month window period (or any extended specified period) had closed, royalties would be paid only from the month in which registration took place, no longer from month 1. He stressed that the payment of royalties from date of commencement would not be tantamount to “retrospective” application.

Adv Mongameli Kweta, State Law Advisor, Office of the Chief State Law Advisor, concurred with Adv Strydom’s comments.

Mr Smalle asked how this would apply, from a practical point of view, in relation to trade in a by product of a living thing, or livestock, such as Nguni cattle or a plant.

Adv Strydom said theoretically, and even in terms of the Bill, it was quite conceivable that Nguni cattle were associated with an indigenous community, who had first bred those cattle, and that the community therefore held a trademark in respect of that breed. Commercial farmers now breeding those cattle on a commercial basis may well need to enter in profit-sharing agreements.

Mr Smalle still thought there might be practical difficulties, as this would relate to something living and in the public domain. It might be far too difficult to control that benefit if, for instance, there were 500 farmers, countrywide, breeding those cattle. Perhaps some rights may need to be exempted.

Mr B Radebe (ANC) pointed out that this had to do with biodiversity, and it was possible to protect the genetic identity of Nguni cattle.

Mr Selau added that some conflicts arose with water use, and spring water from one area, which ran into a river, might converge with other water, to the point where it would be impossible for a person or community to claim that water collected at a point was “their water”. The Department of Water Affairs had grappled with this problem.

Registered proprietor” provisions
Adv Kweta reminded the Committee that on the previous day, the drafters had proposed that the references to “registered proprietor” would be removed wherever they appeared, and the word “proprietor” would be used instead.

The Chairperson noted that a clean draft of the Bill was being printed.

Mr Harris wanted to set out the position of the DA very clearly, in relation to the proposed changes as they related to the application of the Designs Act. The DA strongly opposed the proposals that were made by the drafters on the previous day, and although this compromise, as set out by Adv van der Merwe, was an improvement, the DA could still not support it. The DA believed that even the new proposal would create too much uncertainty in the minds of derivative users, as to whether they would need to pay a royalty. He pointed out that the decision on registration did not vest in the derivative users, who would in the end be required to pay, but in the indigenous community, and the derivative user would have no influence on the community’s decision in regard to registration, although he or she would be affected by it economically. He also noted that it should not be assumed that all derivative users were rich capitalists. An Ndelebe trader making beaded representations of the huts in her indigenous community would be a derivate user of that community’s designs. She could potentially be liable to pay, if she earned above a certain threshold, up to 36 months worth of royalties, but there were no certainty as to when and whether this would have to be paid. If, in month 35, she had to meet with her community, to sign a benefit sharing arrangement, it might only then become apparent that it would be unaffordable for her, but she would not be able to resile from this, and may go insolvent. That anomaly had to be fixed. Both the initial proposal, and the compromise, created far too much uncertainty and would dis-incentivise creative and productive use of those items.

Adv Strydom said that he heard and understood these concerns and agreed that the situation outlined by Mr Harris could occur, which was of concern. The drafters may need to give more thought to the potential for abuse or hardship.

Adv Kweta said that this was essentially a policy position. On the other side of the coin, a registered proprietor who had already derived considerable profit from using a design may not wish to enter into any arrangement with a community, and could make the position difficult for that community.

The Chairperson noted that some progress had been acknowledged this morning. She herself was not sure about this issue. There had been considerable discussion around it.

Adv Strydom noted, on behalf of all the drafters that they still maintained that by virtue of the fact on commencement it should be clear that even though a right was unregistered, it might be in existence. From a legal perspective, based on the possibility of a challenge, the drafters were happy that there were not problems: the Committee must simply decide on the policy.

Adv van der Merwe noted that if the parties could not come to an agreement, then there was an alternative dispute resolution (now increased to an appeal and review mechanism). She would not think that an adjudicator would not take into account a complaint that a business may have to close down, and that this liability was not foreseen or included in the business plan. However, there did seem to be some merit in also giving a person the opportunity to take a business decision to close down, rather than be sequestrated.

The Chairperson noted that the final version of the Bill would be submitted to the printers that afternoon, and would be brought forward the next day, for formal adoption.

In the meantime she asked that the Committee should go through the Bill clause by clause.

Mr Harris asked if Members would go line by line through the new version on the Bill on the following day.

The Chairperson said that she was not intending to call for a proposal for adoption, but it would be desirable for Members to raise queries now, to ensure that the version was correct by the time it was sent to the printers.

Clauses 1
Clause 1 inserted new definitions into the Performers’ Protection Act. Members made no comments on these clauses.

Clause 2
The Chairperson pointed out the insertions from page 10, relating to the Performers’ Protection Act
Members raised no comments on these clauses.

Clause 3
The Chairperson indicated the additions to the Copyright Act No 98 of 1978.

At this point Mr Harris and Adv Alberts asked how the process would unfold.

Adv Alberts noted that he wanted to address the Committee on the proposals for the Preamble, but he would have to leave shortly.

Mr Harris noted that he and other opposition members had already given notice that they had to leave at 12h00. The Agenda had been approved at the start of the meeting, clearly indicating closure of the meeting at 12h00, and he would strongly object to the Committee extending beyond that time, whether or not it considered the Bill or any other “housekeeping” matters.

The Chairperson noted his comments, and said that in this case the Committee would stop discussions on the Bill and proceed to its other business.

Other Committee business
Invitations to attend People’s Assembly

The Chairperson noted that Members may have received separate invitations for the People’s Assembly and the ANC would be discussing this on Monday.

Ms S van der Merwe, Mr Selau, Mr Mabasa, and Ms F Khumalo (ANC) and Ms Kotsi indicated that they would attend

International Astronautical Congress: 2 October 2011 |
The Chairperson noted that the Chairperson of the Committee, plus two other delegates, had been invited to attend the International Astronautical Congress, starting on 2 October 2011. The focus would be the use of space technology for managing food, technology and energy resources.

World Trade Organisation (WTO)
The Chairperson indicated that she and one or two others had been requested to attend, but at this point the Parliamentary Liaison Officer was not present to give the details.

Committee programme
Mr Harris put a formal DA request that the formal deliberation on this Bill should not proceed on the following day. He noted that some of the issues placed on the table for deliberation had not been fully resolved, and there would be no time to deal with them before voting on the clauses proceeded.

Secondly, he wished to record the DA’s view that this Bill should be referred to the National House of Traditional Leaders (NHTL). He had spoken informally to a Member of that House who shared his opinion. He thought that if Parliament passed the Bill without following that step, the Bill would be open to challenge.

Thirdly he noted that substantial changes had been made to the Bill. The DA believed that the new version must be aired publicly again.

The Chairperson said that the point about the NHTL comment had been raised several times, the Committee had sought a legal opinion and had taken the decision that it was not necessary to follow this route.

Adv Kweta noted that he and the Parliamentary Legal Advisors had provided opinions on this already.

The Chairperson read out from the opinion headed “Does the Bill have to be referred to the NHTL?”, which was lodged on 8 September. She emphasised the portion stating that this Bill did not seek to repeal, replace or amend customary laws, nor did it require them to be codified, and for this reason the legal advisors did not feel that it had to be referred to the NHTL in terms of section 18. The purpose of section 18 was to elicit comment from the NHTL “in certain circumstances” – so it was clear that this was not compulsory in every case. The drafting team had consulted, and the NHTL did not indicate that it differed in any way with the tagging, which indicated that referral in terms of section 18 was not required. She further reminded Members that during the oversight visit the Committee had met with some traditional leaders, who confirmed that they had no problem.

Mr Radebe commented on the suggestion that the consideration of the Bill must be delayed. The Committee was attempting to advance the interests of those who had been most down-trodden and most exploited, namely indigenous communities. The Committee was trying to build a united, democratic, non racial and non sexist society, and it was necessary to make concessions on some points and be more flexible to achieve these aims. He was concerned that sometimes it seemed that more focus was given to those with strength, rather than those who were most needy. He appealed that the Committee should not delay in further in dealing with the Bill, as this Bill was creating new freedom for the indigenous communities. He agreed with the legal opinions on the NHTL, and called on Members to respect the law and people’s needs, and proceed with the matter expeditiously.

The Chairperson responded to Mr Harris’ point that some different views must still be fully advanced and argued. All parties were at liberty, should then feel that their points had not been taken into account, or that the law was flawed, to take this to the Constitutional Court. She accepted that Members may wish to oppose or put forward contrary proposals on clauses, and that was their prerogative.

The third matter raised by Mr Harris was a practical issue. She would ask the Committee, on the following day, whether it felt ready to proceed with the adoption of the Bill. She was confident that the Committee had followed the correct procedures, and had acted in a correct manner. She may not, from a political viewpoint, persuade all Members to accept her views, but she did have confidence in what the Committee had done.

She noted that now that some colleagues were preparing to leave, Adv Alberts’ presentation on the Preamble must stand over to the following day.

Adv Alberts noted that he could only speak for himself, and not for other opposition parties. He had discussed matters, however, with the DA Members, and had advised them to present their views to the Committee, and must record, in fairness, that although he had advised Mr Harris to present the outcomes of the discussions with the NHTL to the Committee, Mr Harris had not wished to be disruptive and interrupt the meeting. He too asked to be excused at this point.

The meeting was adjourned.


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