Copyright Amendment Bill: Farlam Copyright Review Commission: briefing by DTI

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Trade and Industry

14 March 2018
Chairperson: Ms L Theko (ANC)
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Meeting Summary

The Department of Trade and Industry briefed the Sub-Committee on the Copyright Amendment Bill on the Farlam Commission  on Copyright Review. The creative industry met with the President in 2009 to address challenges experienced by artists. In 2010, Minister Rob Davies established the Copyright Review Commission to assess the concerns about the model of collecting societies used for the distribution of royalties to musicians and composers of music. The Commission was chaired by Judge Ian Farlam. Its recommendations were presented in 2012.

The key policy proposals of the Farlam Commission were:
• The right to communicate literal and musical work to the public and the right to make copies of sound recordings available
• Amending the copyright law to allow the Registrar to take over the administration as opposed to the withdrawal of accreditation of any relevant collecting society
• Legislation must be amended to allow for one Collecting Society per set of rights
• The retention of music would be compulsory for essential music users
• Royalties payable for sound recordings would be distributed equally (50/50) between the artists and the recording companies
• To allow the rights holders and users to engage the Copyright Tribunal in disputes about the appropriate tariffs to be applied
• The definition of music in the Act should be expanded because it had some restrictions
• The legislation be reviewed to bring within the trends of the new development in the regime
• The Minister should work with the Minister of Communications with the view of encouraging the SABC and royalty collection agencies to effect the collection of royalties from 2006
• DTI to draw up standard contracts between music companies and artists to ensure fairness for both parties
• The collecting societies that fall outside the ambit of the legislation should be given a timeframe after the date of amendments to reduce administrations costs to be in line with the requirements of the regulations
• An impact assessment study needs to be conducted to ratify and implement the WIPO (World Intellectual Property Organisation) treaties.

The Chairperson was displeased that DTI had not implemented the recommendations of the Farlam Commission. She indicated that DTI was supposed to present how the recommendations were to be implemented and highlight areas in which it failed or experienced challenges.

Members asked who was responsible for the ratification; an explanation was needed why nothing had been done about implementing the Farlam non-legislation recommendations; how to implement the Farlam recommendations to assist artists swiftly and how to deal with the Tribunal.

DTI assured the Committee that it will produce the information in written form and present to the Committee. In the interim, DTI will focus on addressing royalties and ensure that artists are paid and about ratifying the international treaties.
 

Meeting report

Ms L Theko (ANC), Chair of the Sub-Committee on the Copyright Amendment Bill, welcomed the delegation as well as Mr Mbuyane who was the only other Member present. No Members from the opposition parties were present and they had all submitted apologies.

Copyright Review Commission: briefing by DTI
Mr Lionel October, DTI Director General, stated that the main aim of the Commission had been to provide some relief to artists, performers and musicians. Copyright legislation covered a range of artistry. The Farlam Commission dealt with the music segment of the industry due to musicians not receiving their royalties because monies were being paid to the recording companies. The main objective was to prioritise the musicians in the interim to deal with the challenges they are facing in the industry. The situation was so dire that the artists called to meet with the President in 2009. It was in that context, that it was discovered that the SABC and some radio stations were refusing to pay monies to the artists for their work. There were a lot of legal disputes on that and as a result the Minister established a Commission to specifically zoom in to these issues and formulate recommendations. Judge Ian Farlam was appointed as the experienced judge in this context, and the Commission consisted of five members. The work was completed in 2011, and the Report was presented to the Committee in 2012. In addition, in 2013, because DTI was dealing with amending the Copyright Act people suggested that the entire intellectual property legislation be reconsidered as it covered a range of issues that were touched on by the Farlam Commission.

In engaging with countries such as Ghana and France, it was found that the artists were very protected in other countries, especially in France – where all musicians belonged to one collecting society and the broadcasters are forced by legislation to pay the collecting society and it would then distribute the money to the artists. In France, artists have funeral plans and other essential insurance products with just one collection society for every artist speciality.

In SA there are a lot of disputes on this, so the main objective of the Farlam Commission was to regulate this through legislation. On the percentages paid by broadcasters to the recording companies and the artists, Judge Farlam proposed that the percentage must be split equally (50/50) between the recording companies and the artists in order to resolve this. One of the clear recommendations was to strengthen the Tribunal to resolve disputes and not let these go through the long court processes.

Ms Evelyn Masotja, DTI Deputy Director-General: Consumer and Corporate Regulation Division, took Members through the key proposals. Most of these proposals had influenced the provisions in the Copyright Amendment Bill:
• The right to communicate literal and musical work to the public and the right to make copies of sound recordings available
• Amending the copyright law to allow the Registrar to take over the administration as opposed to the withdrawal of accreditation of any relevant collecting society
• Legislation must be amended to allow for one Collecting Society per set of rights
• The retention of music would be compulsory for essential music users
• Royalties payable for sound recordings would be distributed equally (50/50) between the artists and the recording companies
• To allow the rights holders and users to engage the Copyright Tribunal in disputes about the appropriate tariffs to be applied
• The definition of music in the Act should be expanded because it had some restrictions
• The legislation be reviewed to bring within the trends of the new development in the regime
• The Minister should work with the Minister of Communications with the view of encouraging the SABC and royalty collection agencies to effect the collection of royalties from 2006
• DTI to draw up standard contracts between music companies and artists to ensure fairness for both parties
• The collecting societies that fall outside the ambit of the legislation should be given a timeframe after the date of amendments to reduce administrations costs to be in line with the requirements of the regulations
• An impact assessment study needs to be conducted to ratify and implement the WIPO (World Intellectual Property Organisation) treaties.

DTI is currently in the process of identifying areas to implement the Farlam Commission non-legislation recommendations to ensure that the artists are not kept waiting for much longer.

Mr October stated that DTI wants to look at the international treaties suggested by the Farlam Commission for South Africa to become a Member. This could only be done with the permission of the Committee but in the interim DTI could prepare the paperwork and present it to Committee. This needs the ratification of Parliament before it could be implemented by DTI. The Farlam Commission zooms specifically into the policy issues outlined under Group 1 of the policy areas to be focused on by the Committee in its terms of reference. Under Group 2 the lawyers can advise on that and it would focus on the establishment and the powers of the Tribunal.

He proposed that the Performers Protection Act be brought on board as well because it falls within the Farlam impact. When DTI was trying to implement the Farlam recommendations, it was told that the current Copyright Act was very old and restrictive. There is still a need for extensive debate and engagement. In the interim, DTI would like to implement the Farlam Recommendations and move forward with the Treaties until there is consensus on the bigger issues. He emphasized the importance of addressing items affecting the artists swiftly. There are three or four other pieces of legislation that DTI wished to present to the Committee; hence the proposals to deal swiftly with the implementation of the Farlam Recommendations and signing of the Treaties in the interim.

Discussion
Ms Theko asked what took DTI so long in implementing the recommendations by the Farlam Commission to alleviate the problems of the artists. Clearly the Department has failed. She asked who should do the ratification, because an explanation would be needed on why nothing has been done thus far, in implementing the Farlam recommendations. DTI was supposed to present on how far it has managed to implement the recommendations and indicate where it faced challenges.

Mr S Mbuyane (ANC) welcomed the presentation, but he was confused by the 1978 Act that governs the copyright industry whilst the country is in a new dispensation. He proposed that the Subcommittee deals with what is on the table to avoid having had a commission in 2011 but with nothing achieved in implementing its recommendations. He asked where the Committee can focus in addressing some of the recommendations swiftly, and proceed to amending the Act. He suggested strongly that the royalties be dealt with rapidly because it was a key area where artists were being exploited.

Ms Theko suggested that DTI puts in writing its proposals for the groupings on policy focus areas. DTI needs to indicate what can be done swiftly in the interim and propose a strategy. All recommendations should be investigated to see if they are appropriate for the people. DTI must be very clear on what it plans to do. On the WIPO treaty, has DTI conducted the effect of internet use in relation to copyright? She wanted to hear more about the DTI status report on what it has managed to accomplish thus far.

Mr October replied that the information will be provided in writing and what needed to be done to get it enshrined in law. Some treaties can be done immediately but legal advice would be required on that, and that will be sought by DTI. The question of treaties resides with three parties: DTI, the State Law Advisor and DIRCO. Some of the issues overlap with the amendment of the legislation. Secondly, DTI will provide the exact clauses and amendments that need to be fast tracked which directly flow from the Farlam Commission. Judge Farlam made it clear that under the current law, government cannot make these companies pay or force them to pay royalties to artists.
 
When DTI dealt with the artists, it did so with the musicians but there was also the issue of educators and people being stuck with the inability to resell their products. Hence, Cabinet decided that moving forward there must be unison within the relevant parties. The big broadcasters were saying that if the legislation was touched, they would not entertain the artists because they would be unaware of where their contracts with the artists stood. Many parts of the industries are pushing for “fair use” but the majority of the stakeholders in the industry are proposing otherwise because there is uncertainty on where these new amendments are going to leave them. DTI can draft something robust enough to be workable and ensure that people benefit. DTI will try to make the legislation favour the artists and indicate how the royalties can be distributed to the artists.

Mr October proposed that DTI be given up until next week to prepare something that it can presented to the Committee.

The Chairperson agreed that DTI provide it in written form for Members to prepare.

Adv Charmaine Van Der Merwe, Senior Legal Advisor: Parliament, agreed with the proposal.

Mr Mbuyane asked for clarity in writing on how to deal with the Tribunal. He wanted to know why the industry was governed by WIPO when SA is not part of it.

Mr October replied that SA is a member WIPO but to be covered by specific treaties you must also abide by the treaties obligations. It is virtually like the WTO, SA is a member of WTO but you can decide to join certain treaties such as pluri-laterals. There is consensus now with the broadcasters on local content. There is high percentage for public broadcasters – this is a quick win and it could be done quicker.

Ms Masotja responded that when Judge Farlam looked at the model for collecting societies there was a big problem with governance because there were different collecting societies that were collecting for different rights. They collect across the board and not every musician is registered with them. Judge Farlam said that DTI needed to be careful because there is not “one right; one collecting society”. In 2002 DTI amended the Copyright Act to include needle time because this never existed in SA’s history so that every time a song plays on the radio the artist is entitled to royalties. There is a need for a collecting society to collect for that. The other problem was that the broadcasters would pay the collecting society but the money would be locked up in there because the collecting society does not know who their members are to distribute the income. Secondly, there are performance rights, so there was a recommendation to have a collecting society that will register all actors or performers. Thirdly, the mechanical rights on the ringtones as no one is paying for the ringtones. So the recommendation was that there must be a collecting society for each of those rights. Judge Farlam also recommended that for needle rights, there must be an equal split of the royalties between the artist and the recording company.

With regards to the treaties, SA is a member of the WIPO but it did not accede to the treaties because when you sign a treaty or ratify, you have one year to get certain obligations done. If you ratify, the Copyright Amendment Bill needs to have the treaty language incorporated into the domestic law environment.

On local content, Farlam said local content is set too low. He advised that there was a need for coordination with the Departments of Communications and Arts and Culture to come up with a uniform content.

Another issue with the Tribunal is that you can have a very high local content level set at 90% but if the tariff is low (SA has one of the lowest tariffs in the world at 3%), the artist will still not earn an income. Farlam wanted the Tribunal to be strengthened to pronounce on tariffs because at the moment it cannot. This is to streamline matters. Artists need to be registered for a collecting society, even though this is optional, so that the collecting society and the distribution plans can go through the CIPC (Companies and Intellectual Property Commission) for approval so that it can be apparent where the income is going to.

Mr October stated that the biggest debate would be on “fair use” and “fair dealings” policy areas. DTI wants the payments for royalties to be done immediately, and this is something that DTI will ensure it gets going.

Ms Theko thanked DTI for its presentation, and the Committee looked forward to hearing about the developments as suggested.

The meeting was adjourned.
 

Present

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