Copyright Amendment Bill: subcommittee deliberations

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Trade and Industry

18 April 2018
Chairperson: Ms C Theko (ANC)
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Meeting Summary

The subcommittee met to address some of the outstanding issues to be included in the Copyright Bill. The pace of the draft legislation had been extremely slow, especially considering the fact that the legislation was seeking to address recommendations made by the Farlam Copyright Review Commission presented in 2012.

The Content Advisor summarised progress made in the three previous meetings of the subcommittee.

Members agreed that the pace was too slow.

The Department of Trade and Industry made a presentation on the background to the Copyright Bill but was interrupted by the Chairperson who asked the Department to move forward and not to repeat presentations made previously. A discussion followed, led by a new Member of the subcommittee, in which it was suggested that DTI was going into too much detail. The time for in-depth detailed consideration of issues was over. The legislative process was too slow and far too detailed while older artists were dying as paupers. The Department should address all the issues by creating a problem statement for each issue and then providing a solution to the problem, having consulted with the legal advisors. Finally, the Department of Trade and Industry should present the proposed wording for that specific clause in the Bill. The Department was providing excellent explanations and detail, but it was time to cut to the chase and complete the work at hand. The subcommittee should address the problem statement and then address issues of implementation.

Based on the recommendations of CRC, the country needed to have an effective model for collecting royalties as there were gaps in the implementation of royalty collections and artists were suffering. Comment from the public was that freedom of association had to be guaranteed, which would not be the case if individuals had to become a member of a particular collection society as envisaged in the Bill. Each collecting society was to perform a function in a specific area. The Department of Trade and Industry proposed to resolve the legitimate concerns about restricting freedom of association by allowing individuals to opt for signing a contract with someone who would take care of their royalties and other interests. Fees to be charged by societies and for the signing of contracts were to be similar to avoid discrimination against those who chose not to join a society. The timing was not appropriate to impose a restriction on the functions of each collecting society or the principle of ‘one industry, one union’. However, all societies would have to register with the Companies and Intellectual Properties Commission that would then take on the function of monitoring those societies. The current tribunal was to be revised as that was quicker than establishing a new tribunal and it would attend specifically to copyright issues. The Farlam Commission proposal of a 50/50 division of royalties between artists and recording companies would be included in the legislation in order to break the deadlock that had resulted in court battles and the withholding of artists’ royalties.

Three issues were to be added to the recommendations of the Farlam Commission. The current legislation would, therefore, also address the issues of hearing-impaired people, librarians and museum staff, and the Department of Trade and Industry would select a third issue, but one that was not contentious so that the legislation could be fast-tracked.

The Chairperson instructed the Department of Trade and Industry to submit a document addressing each item from the Farlam Commission, as well as the additions, in the manner discussed in the subcommittee meeting by the following day. The Department of Arts and Culture was to be invited to future meetings to ensure that the Department was onboard with the proposed legislative changes.

 

Meeting report

Opening remarks
The Chairperson requested a summary of what the sub-committee had done and the way forward as Mr M Mahlobo (ANC) was a new Member of the subcommittee. Thereafter, the Department of Trade and Industry would make a presentation.

Progress Update
Ms Margot Sheldon, Committee Content Advisor, informed the subcommittee that it had had three meetings thus far. The initial meeting had dealt with planning. At the second meeting, the DTI had been requested to give an overview of the Farlam Copyright Review Commission recommendations, the background and where the Bill was coming from as well as its position on particular issues. The third meeting had determined that the subcommittee would first focus on the Copyright Review Commission (CRC) recommendations that were linked to the Bill. Those recommendations related to the collecting societies, indigenous knowledge, royalty payments, assignment, resale of rights, rights of copyright holders and copyright tribunal. The discussion on the collecting societies had begun but the discussion had not been completed. It was intended that the meeting should focus on that matter first. The meeting would then move on to discuss the other issues.

Presentation on key issues raised by stakeholder per policy area on the Copyright Amendment Bill
Mr Lionel October, Director-General at the Department of Trade and Industry, thanked the Chairperson and asked to hand over to the Deputy Director-General for Consumer and Corporate Regulation Division, Dr Evelyn Masoga, whose division dealt with consumer and corporate matters and handled all regulations.

The DG stated that the Bill was on track. There would be two phases with the Bill. The main issues that the Bill tried to address were those relating to musicians and artists. For the past five to six years artists had not been paid royalties, especially in respect of “needle time”, which meant that if their music was played on television or the radio, the artists were not getting their royalties. It was especially black artists who were not getting paid because there was a range of disputes. Regarding the CRC Report, the DG explained that Judge Farlam had been appointed to work out how to get payments made and how to look after the lives of the artists, who had been dying as paupers. He came up with an extensive set of recommendations. His Commission had travelled the continent and the world to examine payment systems and, subsequently, the Commission had come up with a set of recommendations on how to unlock the money.

There was currently a big dispute between the recoding companies, such as Sony and others, about how much they should receive and how much the artists should receive of the total royalties paid. The Farlam Commission had recommended that there should be a 50-50 split. There had to be properly recorded collecting societies, there had to be legislation, and so on.

It had been decided to work in two phases. Cabinet had initially instructed the DTI to address all the intellectual properties issues but it had been difficult to deal with all of the issues and so it had been agreed to fast-track the musician section, i.e. the recommendations of the Farlam Commission to address the issues of the musicians and artists. In the next phase, the bigger issues of Intellectual Property would be addressed. The DG would also propose certain non-contentious issues that could be included in the current phase.

The Chairperson reminded Members that they constituted a subcommittee and the matter had to be taken to the full Committee for a decision about dealing with those matters. It was a work-in-progress.

Dr Evelyn Masoga stated that the Department had received a list of comments and had been asked to clarify the DTI’s position on the issues. The DTI had tried to outline its responses and the policy positions on the various issues that had come from the stakeholders. She would begin with a brief recap. Although she was sure that the subcommittee had heard it several times before, she would recap so that everyone was on the same page. As a background, she stated that when DTI spoke about Intellectual Property, it referred to creations of the mind which included inventions, literary and artistic works, symbols, images and designs used in commerce. They were divided into two categories: industrial property and copyright and related rights. Industrial property related to inventions, patents, trademarks, industrial designs and geographic indications. Copyright and related rights related to literary and artistic works, architectural design, production and performance of music.

In 2013 the draft Bill was finalised and published. DTI had received 118 submissions and the Copyright Bill had been put in place. It was later divided into the Copyright and Performers Amendment Bills and there had been consultation. The Department had received 122 submissions. In that process, the Presidential Task Team that had been led by the former Deputy Minister had wanted the Bill to be prioritised and finalised. The Bill had received support from key government departments and DTI was currently working with the Department of Arts and Culture to try to take the Bill forward.

Mr Mahlobo interjected, stating that the background information was not necessary as everyone was on board. He suggested that they go straight to the issues. What was DTI suggesting? It was important to resolve the issues. The Content Advisor had indicated that the subcommittee was holding its fourth meeting. The subcommittee needed to deal with the issues.

The DDG stated that she would move on to give a snapshot of the societies involved and she would clarify what each of the five collecting societies did. The five societies were: SAMRO, including DALRO, CAPASSO, SAMPRA, IMPRA and RISA. Challenges included the fact that most collecting societies collapsed as they could not cope with collecting for all the different rights holders, there were very few collecting societies and, in many instances when rights were collected for administering licences for use, it was not done correctly. Based on the recommendations of CRC, the country needed to have an effective model for collecting royalties. Currently there were gaps in the implementation of royalty collections.

The comment from public was that freedom of association had to be guaranteed, which would not be the case if individuals had to become a member of a particular collection society. The draft Bill had envisaged each collecting society performing a function in a specific area. DTI had responded that freedom of association was not impaired as it was not obligatory to belong to a society. Artists could rely on other mechanisms for the collecting of their royalties.

The Chairperson interjected, stating that the subcommittee had heard the report before. It was the second time that the report was being presented. The Companies and Intellectual Properties Commission (CIPC) had to give recommendations and DTI should advise as to how to move forward. The subcommittee had also requested a list of issues from the public consultations. There were four things that should have been presented. She did not have the minutes, but she knew that there were four things that had to be addressed.

The DDG agreed that the Chairperson was correct and that there were issues around the practical implementation of the collecting societies that DTI had been asked to present. The subcommittee had asked CIPC to state who was being regulated as a collecting society and to present recommendations, and there was also a list of issues from the public consultations relating to collecting societies that had to be dealt with. Subsequently, the DTI had received a request from Parliament with a list of issues that DTI needed to respond to.

The Chairperson said that she did not want to confuse issues. Issues from outside the subcommittee should not be addressed because then the DTI was confusing the whole thing and the subcommittee would not know what it was doing.

The Content Advisor stated that the DTI presentation had been consolidating the issues. They were not new issues, but DTI had started to address stakeholder issues at the previous meeting and the DDG was currently wrapping that up. The DDG could wrap up so that they could get to CIPC.

The DDG indicated that she was happy to skip the current section.

The DG agreed with the DDG and suggested that the meeting should go straight to the recommendations. The meeting could go straight to CIPC and then DTI would make proposals.

The Chairperson stated that the meeting needed to finalise issues. She wanted to finalise the things that the Committee had started so Members could be advised on how to go forward.

Mr Kadi Petje, Senior Manager: Copyright, CIPC, stated that the previous time, CIPC had given a practical indication of how collecting societies worked. His department had gone through the legal provisions in respect of the policy issues, such as having a single collecting society, etc. He thought that they could go through the legal issues in the presentation and address issues raised.

The DG asked the DDG to go straight into the proposals.

The DDG stated that the way that she had prepared for the meeting was to give an overview of the areas that should be part of Phase 1 of the work that was being done. The intention was that that the DTI would finalise the public comment issues and then it would address the Farlam issues. She had intended to complete the discussions on public comments at that meeting and had planned to deal with the specific provisions the following day, but she could give a broad overview.

The Chairperson asked someone to write down the decisions of the meeting. She asked Members if they were comfortable with the way forward.

Mr S Mbuyane (ANC) said that that approach was fine with him.

Mr Mahlobo said that the matter had to be addressed speedily. He was trying to ride a train already in motion. The matter had to be concluded expeditiously. The DTI had already determined what to do. When the ANC had been unbanned, many comrades were in their fifties and, 27 years on, they were old, and the country was losing them, hence the need for haste. It would have been nice to have a presentation of the challenge in each key area and what the DTI suggested as a response to the challenge and a third column which proposed the rephrasing of the clause in the Bill. It was not necessary to have so many meetings to deal with a single issue. There were not many issues. Fewer than six key issues had been raised and recommendations should be made, or the proposal could be dismissed, with reasons. The issues should be presented, and decisions should be made. Concerning the issue of the collections, the most important aspect was the freedom of association and so the subcommittee wanted to know what the legal experts were saying? It would have been nice to close the chapter. He had an advantage because he had gone through it before when the matter had gone to Cabinet.

Thereafter the bigger issues could be addressed. Those would be the Intellectual Property issues. The strategy was to avoid abuse and administration. But the Chairperson would guide the sub-Committee.

The main issue currently under discussion was the right to freedom of association and matters of institutional capacity, governance and administrative issues and how those would work in terms of the regulatory mechanisms. For example, if someone said that freedom of association was limited, one got a legal opinion and if that opinion agreed that it was limited, then DTI should ask to what extent it was limited and then come up with a solution to deal with that issue. That was how DTI should deal with each of the issues so that solutions could be proposed and accepted, or not, by the subcommittee. At the end of the day, the intention was to avoid abuse and exploitation.

Mr Mahlobo told the DG that he had often wondered why it took so long to finalise a Bill. The key approach should be the problem statement, and then the DTI could propose solutions. The process should be simple. Was there a legal issue? If there was, how could the situation be addressed? The subcommittee should address the problem statement and then address issues of implementation. As the DG had said, the subcommittee was dealing with issues of the most vulnerable. That was Mr Mahlobo’s one cent contribution, for what it was worth.

The DG appreciated the guidance offered by Mr Mahlobo. DTI would proceed straight to the issues. People had invested a lot of time in the matter and into the bigger debates, but they had to be clinical to conclude the matter. On the matter of freedom of association, the proposed Amendments were sustainable because that was the way that it had always been in the country and it was international practice. For example, in France, collection agencies dealt with musicians from start up to the grave. Artists were looked after. It was entrenched in French law. It was an important mechanism and that was what the DTI wanted to propose.

Mr Mahlobo complimented the DG, noting that he was doing well and that was how the subcommittee should approach the matter. The DG was explaining well and giving a comprehensive answer, which helped. However, the DG should just give the answer and not go into too much detail. He could simply say that collecting societies was international practice. All changes to legislation would be challenged, which was why the DTI had to be sure that they had addressed the challenges in an appropriate way. He should state the problem, note that there was an acceptable international response and make the proposal and then close the issue.

If a proposal was dismissed, the DTI should indicate what the risk was and why it was dismissing a proposal. In South Africa, there was a very loose arrangement for paying royalty and the Bill had to address ways of dealing with the elasticity part of it. Those responses would help because when they went into too much detail, Members could get lost. He apologised for the intervention but was finding the more direct approach very helpful.

The Chairperson said that, with the new approach, the DTI would have to re-organise the document and then send it to the Committee. The Department would not have to present it to the subcommittee, but it could go directly to the technical team that would approach the subcommittee if there was a problem and then DTI could come and explain it.

In response, the DG said that, as far as he understood the request, DTI would list each issue in the phase one matters, which included the COC recommendation and the additional matters that he had indicated, and then make recommendations. It would be very specific: the issue or problem statement, the specific recommendation regarding the position to be taken and the reason, as well as the legal response to the position taken. The Department would put it all in one document for presentation to the subcommittee. If that was the case, he believed that DTI could move very fast and that would give a clear indication of what was to be in the Amendment Bill. The presentation had been prepared for the following day, but DTI would combine the key points from each presentation.

The Chairperson asked if the Committee agreed with the approach.

Mr Mbuyane agreed but stated that he had posed a direct question to which he had expected a response. He had asked if there was a collecting society in place and whether it was registered with CIPC. Did the CIPC envisage one collecting society for all the rights for a particular type of artist, or was it to be the other way around with different collecting societies for different rights? Did collecting societies have a system of memberships? If yes, what was the position with CIPC? Was there a tribunal in place for when members had problems in getting their royalties from the collecting societies? He had also requested clarity on the costs for the music usage.

Mr Mahlobo suggested that the DG should not give too much detail when the DTI drew up the document. It had to be spot-on. He referred to the collecting societies as an example. The presentation by DTI was too detailed and required too much reading. DTI’s answer should be that it was voluntary as artists could choose to have a contract with someone. Exploitation would be dealt with by the contract. If so, what kind of contract was needed? Was there a generic one that could be included in the regulations. What about administration? People should not pay too much. If he wanted to reduce rates, DG should suggest an amount and give a reason for that proposal. Even the contract fee should be the same rate as for collecting societies so that those who chose not to use a society would not have to pay more. DTI should remember that the industry in South Africa was not the same as in the USA and Europe. It was a case of solving the problem statements at each level, making the proposal, and then addressing the administrative issues, such as cost. The solution had to be included.

The DG agreed to draft a document with very specific proposals. The intention was to regulate the governance of collecting societies in a better way and so DTI would create an empowering provision in the legislation. And then there would be, for example, a draft constitution, a draft set of governance rules and so on that would allow CIPC to intervene as the societies would be well-regulated. It would be a lot like what was contained in the Labour Relations Act.

Mr Mahlobo reminded the DG to deal with the faceless administrators of the contracts. Many lawyers would come in saying that they could handle matters for the artists but, over time, the artists would be exploited. Immediately someone was tied in to a contract, that person became more vulnerable.

The DG added that the recommendations of the Farlam Commission would be incorporated in the legislation. He specifically noted that there was a dispute about the percentage of the royalties that the musician received versus the percentage that the recording company would receive. The dispute had been to the courts, and even to the Supreme Court. That issue was holding up millions of Rand. The Farlam Commission had proposed a 50/50 division to break the deadlock. DTI would propose that solution in the legislation so that the money could be paid out.

There was a breakaway group that had formed its own collecting society and DTI would be proposing in the Act that they could apply to CIPRO to be registered in the same way as other collecting societies. That meant that DTI could not immediately propose the principle of ‘one industry, one union.’ DTI would deal with the problem of good governance and freedom of association. The law would be amended to allow for proper administration and oversight.

DTI had revisited the proposal of the establishment of a new tribunal. Three years had been lost in setting up a Companies Tribunal, so the DG thought that it would be better to strengthen the existing tribunal. CIPC should take greater responsibility for managing collecting societies as CIPC had the money. It was functioning very well and was registering companies within hours, so DTI believed that CIPC had the managerial capacity to manage collecting societies. In fact, CIPC had returned R1 million to Treasury the previous year as CIPC collected the funds for the registration of companies etc. directly. That was a change that DTI had made to the original proposal and the DG asked that the subcommittee consider that change as well.

Dr Masoga added that the DTI had originally proposed a bigger tribunal that would deal with all IP-related matters but now the proposal was that the Tribunal focussed only on the copyright issues. It would not impede other tribunals as it would be a very focussed tribunal.

The Chairperson departed to attend the debate in the Portfolio Committee on Labour and handed the Chair to Mr Mbuyane.

Mr Mahlobo suggested that colleagues from Arts and Culture should also attend the next discussion. Although DTI was the lead Department in that legislation, it had to be remembered that the Department of Arts and Culture was closer to the clients. One did not want another Department to feel that it was not on board and the legislation was not helping them. He suggested that when officials were invited to subcommittee meetings, officials from the Department of Arts and Culture also be invited. He suggested inviting those officials that were working with the DDG.

The Acting Chairperson stated that all outstanding questions should be clarified in the written submission. He asked for other clarity-seeking questions, but there were none.

The DDG stated that it was a workable approach and the next time that DTI came to a meeting, it would be looking at closing the matter.

The DG was happy with the pace at which things were moving but he had to add that DTI had agreed with the Minister and the Chairperson of the Portfolio Committee on the phased approach. The Chairperson had allowed DTI to add a maximum of three issues, besides the Farlam Commission issues. DTI had agreed on assistance to visually impaired people because that would not be contentious. The second issue would deal with libraries and museums and a proposal would be made on that issue. The Chairperson had allowed DTI to include a third issue, so DTI would select from the issues that were on the list. The criteria would be that it had to be one which could be implemented without too much resistance from the stakeholders. The full list of issues would be tabled in the next submission.

The intention had been to take the Committee through other issues, but the Department was clear about how to deal with the recommendations of the CRC. Now the subcommittee could move fast. The next time that DTI came to the subcommittee, it would be about finalising the Amendment Bill.

The Acting Chairperson informed the DG that he needed the written submission the following day. There would not be a meeting, so DTI would not be presenting the issues. The technical committee would finalise the issues so that they could be presented to the Portfolio Committee meeting on the coming Tuesday.

Mr Mahlobo asked the acting Chairperson for the proposed timeline until when the President would be signing the legislation. He was worried that they were be losing the old guys, the old artists. He suggested that DG come fully prepared when he next came and did not hold back anything. He should bring more information so that the matter could be concluded. It was not a difficult matter.

The Acting Chairperson stated that it was definitely necessary to rush. He had been told of a photographer who had had presented during the public hearings but who had since died and still nothing had been finalised. He announced that the meeting for the following day had been cancelled.

Mr Mohlobo noted that it was not always necessary to change laws. He suggested to the DG that usually it was better to amend regulations. The Policy contained in the Act did not change and Regulations gave sufficient powers to address most things.

The Acting Chairperson stated that the due date for the report from the DTI was the following day at 14: 00.

The meeting was adjourned

Present

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