National Lotteries Amendment Bill [B21-2013]: briefing by Department; Protection of Traditional Knowledge Bill

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Trade and Industry

11 September 2013
Chairperson: Ms J Fubbs (ANC)
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Meeting Summary

Protection of Traditional Knowledge Bill
Dr Wilmot James, of the DA, introducing a Private Member’s Bill, described intellectual property (IP)  as a product of human creative activity, and was intangible. Unlike real property and personal property, which was often protected with a physical security device like a fence, intellectual property was protected by sets of enforceable legal rights given to the owner. The three main forms of IP protection were patents, copyright, and trademarks.

Traditional knowledge (TK) was entirely different. The protection of this type of work should not serve as an incentive for the creation of new works. The origin of TK work could not be dated and often was not ascribable to an identifiable creator. The protection of TK sought to address misappropriation or theft of such information, but also sought to promote commercialisation of traditional IP, and to ensure that indigenous communities accrued economic benefit from the commercialisation of their traditional IP.

The Department of Trade and Industry (Dti) had introduced the Intellectual Property Laws Amendment Bill (IPLAB) to give effect to this policy. The Bill proposed to amend the copyright, designs, trademarks, and performers’ protection Acts respectively.  However, the IPLAB had a number of serious failings in regard to its designed purpose and objective. The Bill would not achieve its objective, and would also jeopardise the existing IP system. The internationally agreed upon mechanism to protect TK was through specially drafted legislation – a sui generis approach (a stand-alone form of protection, tailor-made for TK).  The Protection of Traditional Knowledge (PTK) Bill had been introduced to offer an alternative to the IPLAB.

Members said they were impressed by the presentation and supported Dr James. They discussed the sui generis approach at length, and felt it had short comings in ensuring copyrights for traditional knowledge works.  The Chairperson said the Committee should be given time to study the document, as it appeared quite a substantial amount work was needed on the Bill. The Department seemed content that the initial clarification had been made, and it was crucial that at the next meeting this was taken forward as there would possibly be a need for further clarification on the subject matter.

National Lotteries Bill (NLB)

The Department of Trade and Industry (Dti) said that in the current Act, the CEO was appointed by the Board, and the Minister was not in the equation.  The Dti was now saying that this should be changed to the Commission, with the Commissioner equated to the CEO.  The Commissioner should be appointed by the Board, but the Minister should be consulted, hence the use of the word “in consultation” instead of “after consultation”. This was to show that there had to be real agreement between the Minister and the Board.  The Dti would like to request the Committee to allow the Minister into the equation.
 

There also was an issue of “two and eight year periods”, regarding intervention by an organ of state. These periods applied when an operator had won a bid, and was subsequently appointed to run the lottery. The amendment sought to empower the Minister – once there had been a breach of the material conditions of a licence – to appoint an organ of state, within a two year period, to operate the lottery. The Minister was expected at the end of the two years to have put in place a bidding process, so that when that period expired, someone would have been appointed to operate the lottery for a full eight-year term. The intention was to ensure that a new operator, who had satisfied the bidding processes, was appointed before the term of the organ of state had lapsed.

After Members had sought clarification on a number of issues, the Chairperson said Members were not necessarily disagreeing with what the Dti wanted to achieve, but the way it was phrased was not the best possible way, and might be missing the point.  It was not the principle that was being disputed, but how it was aligned. Officials should go back and rethink the amendment and re-present it the following day.
 

Meeting report

Opening remarks
The Chairperson said the Committee would take a briefing from the Democratic Alliance on the Protection of Traditional Knowledge Bill (PTKB). This was in line with the interim rules of Parliament, with respect to the Private Members’ Bill. She hoped the DA would remain for the flagged issues on the National Lotteries Bill (NLB) as well. An apology had been received from one Member of the DA, and Dr James had requested to leave early. Nevertheless the DA would be allowed to brief the Committee. This was the second private members’ bill to be tabled at the Committee. She acknowledged the presence of Parliamentary Legal Advisors, and said it was important that they be present, as the matter bordered on constitutionality, and the Committee did not want to get trapped on the wrong side of the law. She handed over to the DA.

Protection of Traditional Knowledge Bill
Dr Wilmot James (DA) described intellectual property (IP) as a product of human creative activity, and was intangible. Unlike real property and personal property, which was often protected with a physical security device like a fence, intellectual property was protected by sets of enforceable legal rights given to the owner. The purpose of the protection of intellectual property was to encourage innovation and creative work. If the work was not protected, artists would be discouraged as they would not be financially rewarded. Intellectual property protection meant getting financial reward when one had created something. The protection of IP rights ensured that owners were rewarded and that society got the type of IP works that it required.

Each country had its own laws that protected IP, but because countries traded and interacted with each other, it was important that they cooperated and agreed on IP protection. Multilateral and bilateral agreements regulated international IP protection, so it was crucial for SA to comply with international obligations.

The three main forms of IP protection were patents, copyright, and trademarks. Traditional knowledge (TK) was entirely different. The protection of this type of work should not serve as an incentive for the creation of new works. The origin of TK work could not be dated and often was not ascribable to an identifiable creator. The protection of TK sought to address misappropriation or theft of such information, but also sought to promote commercialisation of traditional IP, and to ensure that indigenous communities accrued economic benefit from the commercialisation of their traditional IP.

In 2004, the Cabinet had approved the adoption an Indigenous Knowledge Systems (IKS) policy. Subsequently, the Department of Trade and Industry (Dti) had formulated a policy document on the protection and commercialisation of indigenous knowledge. This policy sought to recognise and protect indigenous knowledge as a form of intellectual property and to enable and promote the commercial exploitation of such material for the benefit of the indigenous communities from which the material originated. On 28 January 2010, the Dti had introduced the Intellectual Property Laws Amendment Bill (IPLAB) to give effect to this policy. The Bill proposed to amend the copyright, designs, trademarks, and performers’ protection Acts respectively.

The IPLAB had a number of serious failings in regard to its designed purpose and objective. The Bill would not achieve its objective, and would also jeopardise the existing IP system. TK could not be sufficiently protected in that manner, so the Bill was set to fail from the outset.  There had been an outcry from the national and international IP fraternity, as well as a Dti commissioned regulatory impact assessment report, advising against this approach. The internationally agreed upon mechanism to protect TK was through a specially drafted legislation – a sui generis approach (a stand-alone form of protection, tailor-made for TK).

The President, due to incorrect tagging and thus no proper consultation with the National House of Traditional Leaders (NHTL), had rescinded the National Assembly’s (NA’s) passing of the IPLAB on 14 March 2013, and referred it back to the Committee. The Bill had subsequently been adopted by the Committee, despite the irregularities that had been raised. The Protection of Traditional Knowledge (PTK) Bill had been introduced to offer an alternative to the IPLAB. The sui generis approach was supported nationally and internationally. It gave legal certainty, was simple to administer, and had the overwhelmingly important attribute in that it did not intrude on the existing SA IP statutory law. The Department of Science and Technology (DST) supported the sui generis approach, as did the Dti’s study on the regulatory impact assessment report. The World Intellectual Property Organisation (WIPO) favoured the approach as well. Going against the grain of the international and regional community’s opinion would jeopardise SA’s IP protection.

The IPLAB had been described by the Deputy President of the Supreme Court of Appeal (SCA) as “fundamentally flawed and incapable of delivering any protection to traditional cultural works.The Law Society of South Africa had called for a sui generis approach since 2007. The IPLAB made the licensing of traditional works subject to onerous formalities and conditions. The circumstances for licensing of works of intellectual property were not at all in accordance with the realities of the market place. The IPLAB created a system where ownership of property was with the state, and not in the communities. Royalties for such property would be exploited by the state. The PTK Bill provided for protected traditional knowledge to be owned by the community. No deprivation or expropriation of a community’s property thus took place.

Discussion
The Chairperson said this was a preliminary process, and that the Committee would return to it at a later stage. Members would not get into the meat of it, but could give general and broad comments.

Mr G McIntosh (COPE) said the PTK Bill had been well aired, and hoped the Dti had been listening and would apply their minds to the matter. This was a good Bill and the Committee should be grateful to Dr James for bringing it before them.

The Chairperson commented that if one was pioneering that particular path, it was always courageous to do so.

Ms S van der Merwe (ANC) said although not agreeing with everything, the presentation had nevertheless been very good.  She supported the view that much of the debate had been held extensively, even in the smaller sub-committee that had dealt with the matter. That Committee was very careful that SA did not appear to be out of line with the international law. International intellectual property organisations indicated they looked to SA to initiate a process that involved protection for indigenous knowledge under its IP laws, and for an approach that made it possible for incorporation into international IP law.

The Chairperson said that before Dr James had joined the Committee, DA Members of the Committee had formed part of the team that had gone to Geneva to get an understanding of the broader workings of the World Trade Organisation (WTO). Members had also spent time at WIPO and received a great deal of information that had been used, so it was interesting that at the end they awaited SA’s piece of legislation on this matter.

The Chairperson sought clarity on when WIPO’s view had changed to supporting the sui generis approach, as the Member had suggested, and why it had changed its stance.

Dr James replied that the quality of a piece of legislation was based on the substantive merits it contained, and there had to be a discussion about that.  In motivating for a piece of legislation, everyone referred to institutions with expert knowledge on the subject to lend credibility to their arguments.  The WIPO had been mentioned in that respect.  Members were correct -- WIPO was in the process of developing a model, and they were looking to SA to provide the model. The IPLAB did not do this.

From the latest research done, and based on a document prepared for WIPO, it was clear that the preference was for a sui generis approach.  Members said lending credibility to an approach did not mean the country was bound by it. What mattered was the substance of what had been recommended. The principal difference between the sui generis approach and the IPLAB was granting legal protection to innovative ideas. This applied to a piece of artistic work, where someone went to a publisher, who in turn would grant copyright protection, and royalties would be given. Nobody else could produce the same artistic work. But that could not be done with traditional knowledge, as the author would not be known. Therefore one could not give legal protection using an existing Copyright Protection Act (CPA). One could not stretch the CPA to accommodate traditional knowledge because it then diluted it, and if the CPA was diluted, then authors would not be incentivised to provide new ideas. What had to be done was to deal with the substance that had been proposed.

Ms Karen Bosman, DA Legal Researcher, said the trend had changed since 2009, when the WIPO had looked to SA to develop IP legislation. Last year, there had been a world IP congress and 100 different countries had attended.  They had all focussed on how to protect traditional knowledge. A lot of people who had knowledge of SA’s Traditional Knowledge Bill, had a very low opinion of it. The congress had adopted a position that the way to go about traditional knowledge rights was the sui generis approach. There might have been uncertainty previously, but now it had been accepted that sui generis was the international framework that would be followed. It would be wise if the country went that direction as well.

The Chairperson said this was a preliminary overview that enabled Members to study what was contained in the Bill. The Committee would then go through it clause by clause. She suggested that when the follow up engagement happened, it would be helpful if a power point presentation was prepared.

Mr MacDonald Netshitenzhe, Dti Chief Director: Policy and Legislation, sought clarity on whether his comprehension of what was being said was correct -- that the sui generis approach that would protect traditional knowledge should not be linked to the current intellectual property legislation.

Dr James replied what was required was for TK property to be protected against theft.

Ms Bosman replied the protection that the sui generis bill would offer was the same as the amendment bill offered, but just a different way of getting there. The manner of getting there was suited for traditional knowledge.

The Chairperson said the Committee should be given time to study the document, as it appeared quite a substantial amount work was needed on the bill. The Department seemed content that the initial clarification had been made, and it was crucial that at the next meeting this was taken forward as there would possibly be a need for further clarification on the subject matter. This was preliminary and the Committee would go into more detail on Tuesday, 17 September.  She hoped the Dti would have looked at the matter and prepared an input.
Dti on National Lotteries Bill (NLB)

The Chairperson said a number of items on the NLB had been flagged.  The first item flagged was on page 4, Clause 2 (b) (1) (b) where it said: “The Minister shall, after consultation with the board...” There were two views on the table. She handed over to the Dti.

Mr Netshitenzhe said he had been briefed that the matters under discussion were policy related. The issue had a history. In the current Act, as it stood, the CEO was appointed by the Board and the Minister was not in the equation.  The Dti was now saying that this should be changed to the Commission, with the Commissioner equated to the CEO.  How to appoint such a person?  The Dti would like to involve the Minister in this process.  The Commissioner should be appointed by the Board, but the Minister should be consulted, hence the use of the word “in consultation” instead of “after consultation”. This was to show that there had to be real agreement between the Minister and the Board.  The Dti would like to request the Committee to allow the Minister into the equation.

Ms Van der Merwe sought clarity on whether the amendment hoped to replace “after consultation” with “in consultation” in the Act.

The officials indicated that this was the case.

The Chairperson asked if the Dti was happy that the Board would do the appointment in consultation with the Minister.

Mr McIntosh commented that he understood where officials were coming from, and in his understanding, the Minister appointed the Board. If this was so, why could the Board not appoint a CEO? He was nervous of Ministers having too much control.  He proposed that the clause read: “The Minister shall, in consultation with the Board.”

Mr B Radebe (ANC) said the explanation was clear.  The Minister could not consult with the Board. He rhetorically asked who was superior in this situation. The phrasing was understandable. The Board should appoint the Commissioner, as the contract would be with the Board.

Dr W James (DA) agreed.

The Chairperson said all Members supported the view of Dti in the clause that “the Board shall, in consultation with the Minister”, and sought to establish if Cope agreed.

Mr McIntosh nodded his assent.

Mr Radebe pointed out also there was flagging of 2C (1) (d) on being “found guilty of any misconduct”. The officials had spoken about jurisprudence.  What would they do?

The Chairperson said the matter had been raised by the Rev W Thring (ACDP). The Member was absent, but it had been agreed with him that the matter needed to be thrashed out.

Adv Johan Strydom, Dti Legal Services, referred the Committee to the A-List, and said the amendment found on page 2, followed directly from the discussion.  Item 9, on page 4, line 30, suggested that the paragraph dealing with the matter be omitted. The following was being proposed:

At this juncture, there was confusion about the relevant document.  Adv Strydom clarified that it was the document that carried the day’s date on the cover page. He said the sentiment had been simply to say the misconduct should be serious. This left scope for being subjective and was simply not enough. It should be conscribed, in item 9, to refer to a person found guilty in any disciplinary proceedings, whether in the Republic or elsewhere, of having acted fraudulently, dishonourably or in breach of a fiduciary.  The Dti would like to propose a subsection (ii). Strictly speaking, one could not be found guilty of having acted fraudulently; this did not constitute a criminal offence. The clause should read “if found guilty, in any court of law in the Republic or elsewhere of a criminal offence involving dishonesty”. This might be fraud, theft, or corruption -- any kind of offence involving dishonesty.

The Chairperson asked if Members were comfortable that this suggestion addressed the concern that had been raised, and there were no objections.

The Chairperson suggested that Members look at the items highlighted in red in the document. She pointed to clause 5.

Mr Netshitenzhe said there was also an issue of “two and eight-year periods”, regarding intervention by an organ of state, which required clarification.  The Dti wanted to have a two-year stand alone period, as well as another eight-year stand alone period. These periods would apply when an operator had won a bid, and was subsequently appointed to run the lottery. The amendment sought to empower the Minister – once there had been a breach to the material conditions of the licence – to appoint an organ of state, within a two year period, to operate the lottery. The Minister was expected at the end of the two years to have put in place a bidding process, so that when that period expired someone would have been appointed to operate the lottery for a full eight-year term. The intention would be to ensure a new operator, who had satisfied the bidding processes, was appointed before the term of the organ of state had lapsed. This applied only when there had been a breach to the licensing conditions, or some other justification.

The eight-year period was needed to deal with a situation where an operator had failed the licence conditions of transferring skills, developing technology, and local procurement. This was where the state would have to come in for the complete eight-year period, so the Dti was distinguishing between the two. The other one was an interim measure, because there was a breach before the expiry of the eight years, or when there was no compliance with material issues, like the national priorities. The Dti was therefore requesting the draft to paint that picture, so that the time periods were not conflated.

The Chairperson commented that the clarification had just made her even more confused than before. The Committee should get the explanation again. She understood that a case had been made for two and eight- year periods, but she did not follow the reasoning.

Mr N Gcwabaza (ANC) said he too was very confused. He had thought the eight-year period came into the picture where an organ of state would complete a period, as opposed to starting an eight-year period from year one.

The Chairperson read out the section. She sought clarity and said she doubted even if the delegation had the same understanding of the proposed amendment. She asked if the delegation had the same understanding of the clarification.

The officials nodded.

Ms Van der Merwe suggested that the amendment read: “the Minister may, after consultation with the board, license or authorise an organ of state to conduct the national lottery for a period not exceeding the eight-year period allocated to the licensee”. Was this what the Department had tried to say, she asked?

The Chairperson said if a licensee had used up four years of a contract and had not complied, the State would intervene and appoint another operator for a period not exceeding what was left in the contract. She asked if this understanding was correct, or the suggestion was that regardless of the year the operator was in the contract, the operator would still get another eight years of the licence, or the it would the eight years, minus the years that had been operated by an organ of state.

Adv Strydom referred Members to page 10 of the Bill, line 21, Section 13A. He said he would not read the particular section, but Members were not dealing with a licensee having been appointed. This was not contemplated by this provision; the provision dealt with a scenario where the Minister, on justifiable grounds, did not wish to issue a licence. The provision proposed that the Minister – in the absence of a licensee – should be allowed to appoint an organ of state, for a two-year period, to do what the licensee should have done. The only issue for consideration by the Committee was whether the period should be two years, or possibly longer. The meeting was not dealing with a situation of an axed licensee, but a scenario where the Minister did not want to appoint an operator to run the lottery.

The Chairperson sought further clarity on whether the explanation referred to a situation where the licence was coming to an end, and where the Minister had made a decision not to appoint on reasonable grounds. This was not a question of people not complying, but the current environment at the time.

Mr Radebe asked what might be the reasonable grounds for a Minister not to appoint a licensee. Under what conditions could this happen?

Ms Van der Merwe sought clarity on why an eight-year period had been chosen, and not less. She failed to understand the jump from two to eight years.

Adv Strydom said that page 3, Clause 13 (a), (b), (c), and (d) of the A-List contained the justifiable grounds for the Minister not to appoint. The sentiment earlier had been that those grounds ought to be written down. He read them out. If those kinds of grounds were in existence, the Minister might take a stance not to appoint a licensee to conduct the lottery. An organ of state would then operate the lottery, and the question was whether the two years was sufficient.  To set up a juristic person to conduct the lottery required time. One had to do financial research and put up infrastructure. Taking all these practicalities into account, it was important to ponder whether two years was sufficient, or whether it could possibly be longer.

The Chairperson asked if she was correct in her understanding that this had nothing to do with non-compliance with an existing contract. She said the challenge in the amendment had to do with the English language, as reference was made only to “a licensee”, and not to licensees generally in the country. Reading the amendment led her to believe there was an aspect of non-compliance.  The Dti was not talking about the broad environment at all, but a specific licensee.  She disagreed with the Dti and said the wording ought to be changed.

Ms Van der Merwe agreed, and said the amendment sounded as though it sought to address two different circumstances. The first one was a situation where the Minister could not find a licensee; the second was when the licensee failed to comply. Until this aspect was resolved, any talk of the two or the eight years was irrelevant.

The Chairperson said clarification was important, and that the two issues had to be separated, especially as they pertained to reasonable grounds.

Adv Strydom conceded that clarification was required.   If one read sub-section (1) in isolation, it was clear the Dti did not envisage a scenario of a licensee being cancelled.  Members were correct that the clause, on justifiable ground, created an impression that there was a licensee in place. If the Committee agreed, this should not be discussed at all, and rather be corrected. The period talked about did not relate to a licensee being in place, but where the Minister did not want to appoint a licensee. This needed to be corrected, and the Department would certainly do so.

The Chairperson said Members would not be able to resolve the issues easily. Members were not necessarily disagreeing with what the Dti wanted to achieve, but the way it was phrased was not the best possible way, and might be missing the point. It was not the principle that was being disputed, but how it was aligned. Officials should go back and rethink the amendment and re-present it the following day.

Adv Strydom said there were too many supplementary issues that would come to the fore the following day, and that the issues required detailed attention.

The Chairperson asked what issues would be involved.

Adv Strydom replied that in terms of the current Act, only juristic persons were entitled to be recipients of grants. There was a whole new amendment in the A-List proposing that not only juristic persons, but persons in general should be eligible for grants and make applications for grants. A series of amendments would have to be made. The second issue surrounded the distributing agencies.  Apart from the name change issue, there had to be transitional provision for the existing distributing agencies. If these were taken into account, it was high unlikely that any item regarding the Bill could be discussed the following day.

The Chairperson said Members needed to try and work hard to push the Bill through. She suggested an early morning for the following day, and a late finish.

The meeting was adjourned.
 

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