Copyright Amendment Bill: new working draft

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Trade and Industry

25 April 2018
Chairperson: Ms J Fubbs (ANC)
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Meeting Summary

The Committee worked through the new working draft of the Copyright Amendment Bill until Clause 10. The following items were flagged for further deliberation at Subcommittee level:
- Copyright protection for computer programs;
- Whether the State can own state-funded copyright material;
- Policy issues in the Bill;
- Determination of the royalty rate;
- Copyright protection for legal and illegal residents;
- Commissioned work on the resale of royalty rights;
- 50/50 split of royalties
- Potential conflict with mandate of DST's National Intellectual Property Management Office.

The discussion mainly looked at the 50% split on royalties. Other questions included the scope of copyright protection not extending to computer programs and about commissioned works.

Meeting report

The Chairperson indicated that the Committee would go through the Bill clause by clause and the Copyright Subcommittee chairperson, confirmed this.

Mr D Macpherson (DA) said he was concerned about the process the Committee was embarking on. Members would recall the original Bill by the Minister was rejected by the Committee and the Committee said it would re-write it. He did not understand why it was in consultation with DTI and what the DTI wanted to retain or reject. He detected a desire to rush the Bill and cut corners.

The Chairperson replied this was not the case. She had spent time to ensure that the process was smooth and fair.

Clause by clause deliberations on the Copyright Amendment Bill
The Chairperson led the Members through the new working draft of the Bill clause by clause. She said whatever is underlined is an addition by the Committee emanating from deliberations.

Adv Charmaine Van Der Merwe, Senior Parliamentary Legal Advisor, said that the changes in the new working draft of the Bill came from public comments. The main concerns were about the technical wording of the Bill. A team was convened to re-work the Bill, and anything that is highlighted “red” indicates the wording that has been changed. Once the Committee has approved the re-drafting, that wording will be changed to “black” font – this was to ensure that the Bill was easier to read. When re-drafting, the team was unsure whether it should make any changes to policy as it was uncertain about the direction of the policy. The current document merely highlights what has happened with the re-wording.

Dr Evelyn Masotja, DTI Deputy Director-General: Consumer and Corporate Regulation, stated that in terms of policy approach, DTI was planning to take the Committee the Bill and highlight the areas that could be reviewed. She hoped that the Department would still get that opportunity.

The Chairperson stated that the Department as part of the drafting team would have had the chance to work on the working draft and make additions or contributions to the Subcommittee. The Committee should hear what the Department has to say and then deliberate and take a decision.

Adv Van Der Merwe alerted the Committee that there is a proposal from DTI to change Tribunal to Copyright Tribunal. Once that decision has been taken, the drafting team would make those changes.

Clause 2(A)
Mr Macpherson asked why the scope of copyright protection did not extend to computer programs.

Ms Theko replied that the Subcommittee has not yet looked at this specific clauses referred to by Mr Macpherson. However, at the moment the Committee is not taking any technical decisions but rather focusing on the wording of the Bill.

Mr Macpherson stated that a clause by clause exercise meant that Members could interrogate the content, the clauses and provisions in the Bill and deliberate on whether it was accepted or rejected. He repeated asking for the rationale for excluding computer programs. There are algorithms behind them and surely those should be protected.

The Chairperson suggested that the matter be flagged and dealt with at Subcommittee level.

Ms Masotja explained that not everything qualifies as copyright material, for example an idea cannot be classified as a copyright. Also a freely available computer program cannot be classified as copyright because it was made available to the public to use, especially specifications of computer programs. However, the matter can be dealt with at Subcommittee level.

Adv Van Der Merwe said clause 2 excludes computer programs due to interface specifications. It is not about computer program but the interface specification, but she did not know what that meant.

Members agreed to deliberate the matter at Subcommittee level.

The Chairperson referred to speeches by politicians which can be regarded as press information. This becomes an issue when politicians make speeches and are misquoted by either the press or the public. She asked the Subcommittee to look into this.

Clause 3
Ms Masotja indicated that a highly contested issue was whether the State can own state-funded copyright material where government provides the funds for specific activities such as DTI incentives. This was complicated and a grey area – she felt that this matter should be flagged for deliberation by the Subcommittee.

Mr J Esterhuizen (IFP) said that there was really no definition of the “funding” by the State – there were a lot of factors that needed to be taken into account. The Bill provides for authors and academics to take a course of action when their rights have been infringed, but he was not convinced that was sufficient protection.

Mr D Mahlobo (ANC) said that it should not be a grey area. People can agree on the terms and conditions of the funding and the ownership of the copyright material. This did not necessarily have to be included in the Bill. It is a contract between two parties who have come to an agreement. The only issue would be additional arrangements, most importantly ensuring that the funders do not exploit the artist.

Mr G Cachalia (DA) suggested that the definition was too broad in terms of artistic work and films funded by government, ownership cannot be vested in government, so the definition needs to be tightened up. This can be flagged for deliberations by the Subcommittee.

The Chairperson agreed to flagging the matter, and asked that the Subcommittee also look at the copyright of paintings and report on it "without extending it to a doctorate".

Ms Masotja pointed out that there is a potential conflict with the mandate of the National Intellectual Property Management Office (NIPMO) which is an entity of the Department of Science and Technology. This needs to be looked at.

The Chairperson advised the Subcommittee to look into it.

Clause 4
Ms Masotja said that the intention of the provision was to ensure that authors of music and publications who never used to receive any incentive for their work will now do so. The word “transfer” may need to be revised. The split in the royalty comes from allowing the parties to contract, otherwise the split in the royalties is 50/50. In terms of an equitable split of the royalty, DTI would like to allow the parties to contract on this and if not, to also have the 50/50 condition.

Mr Mapcherson asked where the provision stemmed from, because it has far reaching consequences. If he commissioned a biography and he paid for the work to be done, will the person who was contracted for the biography be entitled to a 50% of the proceeds?

Ms Masotja replied that there will be someone who will bear the costs, so the 50/50 will be split between the persons that bore the costs as well as the author of the biography. However, this depended on the contractual arrangement between the parties. The intention is to ensure that there is an equitable share of the proceeds amongst the parties.

Mr Cachalia said that this clause is about contracts versus legislation and that conflict needs to be understood clearly. He said the Committee was treading in muddy water with this clause.

The determination of the royalty rate was flagged for discussion by the Subcommittee.

Clause 6
Adv Van Der Merwe said that looking at the documentation from DTI, it appears that this is something that is still being considered for removal or retention in the Bill. The Committee should discuss this after DTI has decided the way forward on this.

The Chairperson reminded the Committee that there are technical consultants and she suggested that the Subcommittee Chairperson should organise that the technical consultants are invited to meetings to ensure that when technical issues arise from the deliberations, a technical consultant is present to assist.

Mr D Mahlobo (ANC) agreed with the Chairperson about the technical amendments. He suggested that the policy issues should also be flagged and go back to the drawing board and to consult the public comments received on these. "Wireless" is a means of access and how information can be distributed.

Royalty rate as prescribed by the Minister
The Chairperson said it was important for the Committee to decide how royalties should be distributed, either at a rate prescribed by the Minister after consultations with the Minister of Arts and Culture, or it was suggested why not the Minister of Finance because it was not a direct transaction with government.

Mr Cachalia said that leaving the determination of the royalty rate to the Minister was problematic because the law of contract in South Africa was operating effectively. There are market mechanisms to determine how contracts should be governed. If we allow the Minister to exercise that discretion, the Bill is treading in muddy water.

Mr Mahlobo said the matter can be discussed at Subcommittee level, Members will all hold different views. If the State is going to regulate, that did not mean that those rates would be determined from a thumb-suck but rather the State sought to assist the disadvantaged.

Ms Masotja noted that it was very important that the Minister was given the powers for prescribing the royalty rate because people, the vulnerable especially, were being abused and exploited by the industry. As the industry does not consider the public interest, the objective is to change that.

The Chairperson said that many black artists never received any royalties for their work. This is the first time this challenge is being dealt with.

Ms E Ntlangwini (ANC) said this suggestion came from one of the public hearings. She suggested that perhaps that submission be distributed to Members for further perusal, because it explain the matter at a much deeper and clearer level.

Mr Mahlobo suggested that some items should remain as policy intent but the mechanism such as setting the rate can be determined by the Minister. This ensures that there is no arbitrary action on the part of the Minister.

South African citizens or residents (resale of royalties, expiration of resale of royalties)
Ms Meshendri Padayachy, Deputy Director: Policy and Intellectual Property Law, said that the copyright protection subsists for an entire lifetime and 50 years after the artist has died. The reason it is still valid after death is to ensure that the heirs can benefit and receive the same rights the artist received when alive.

Mr S Mbuyane (ANC) said that the resale price must be equivalent to the original sale.

Adv A Alberts (FF+) said that someone who is resident in the country can approach the court, but people who are not legal residents can create a wonderful piece of work and they should be entitled to due benefits.

Mr Mahlobo stated that everyone under the sun enjoyed the same rights in South Africa. In the security cluster, government has been taken to court many times with regards to this. Thus, people should be entitled to their due benefits regardless of whether they are illegal or legal residents. However, he suggested that this was flagged to the Subcommittee for further deliberations.

Mr Macpherson said that there was a need for a clear understanding on the difference between an authored and commissioned work for a biography. He did not believe that the author could own the copyright to the commissioned biography that the author has been paid for.

The Chairperson said she was uncertain whether one could classify a biography as an artistic work. She would have thought a biography would fall under a cool, calm academic expression.

Mr Macpherson said that he would agree if there was a definition in the Act on what an artistic expression is. Perhaps, this was something the Subcommittee should look at.

The Chairperson stated that she would have thought paintings, art, sculptures would fall under artistic work as opposed to a biography. However, this could go to the Subcommittee. She advised the Subcommittee to go through the principal Act and look at the seven categories of artist work.

Adv Van Der Merwe replied that commissioned work was in fact a concern about the resale of royalty rights. There are engineering drawings, architectural drawings, commercial layouts and icon logos that are artistic works but they are commissioned. So these things may need to be excluded from the resale of royalty rights or come up with a provision which states commissioned work is not included. This would be flagged.

On the indigenous cultural expressions, she said this is defined in the Intellectual Property Laws Amendment Act, but the Committee may need to look at transitional provisions for the Bill because that Act is not yet operational. So if items are added that deal with cultural expressions there may be a problem of the lack of the definition for it.

Mr A Williams (ANC) referred to commissioned work and said that one photographer at the public hearings, indicated that he was commissioned to do photography work for a hotel and he was paid for it. However, the hotel continued to make use of the photograph over and over again without paying for the additional use. There must be some form of right to proceeds if the work was used after the commissioning.

Adv Alberts said a photographer had approached him and told him that Parliament had commissioned him for photography but they were never paid for its ongoing use. Thus, there is merit in what Mr Williams said.

Mr Cachalia suggested that they not continue discussing this flagged item as this is for the Subcommittee to discuss.

The Chairperson welcomed the point, and indicated that due to time constraints, when the Subcommittee reports back to the Committee these issues would not be dwelled upon. Two years ago, the Intellectual Property Laws Amendment Act (IPLA) had been passed and it was a flagship Bill, but it was not operational. That was intended to pave the way for other copyright legislation. She asked the Department to indicate what its intention was on IPLA when it comes back to Parliament.

Mr Williams stepped in as the Acting Chairperson.

Clause 8 – nature of copyright in cinematographic films, audio visual works
Ms Theko said that any issues raised would be flagged for further deliberation by the Subcommittee.

Clause 9 – royalties on audio visual works
Ms Masotja said that the same principle proposed earlier also applied to audio visuals.

Mr Mahlobo said that the Committee should try not to send everything to the Subcommittee. The Department could proposedd or advise on some of the matters so that the Members can understand the context in which the DTI would like to address the issues.

Ms Masotja welcomed the point, and it would be proposed at the Subcommittee.

Mr Mahlobo indicated that he did not understand why the 50/50 split of royalties was highlighted in the working draft of the Bill as a area of concern because, if in the value chain two parties are involved in the creativity of the work, the royalties would be distributed equitably and just amongst those parties. It is a matter of administration.

Adv Van Der Merwe explained that the word “half” was the DTI policy position but there was a concern about contractual freedom.

The Chairperson said this would need to be flagged and discussed by the Subcommittee.

Mr Mahlobo disagreed and said that the principle on the split of the royalties was determined to be 50% regardless of the numbers and the distribution; it’s a matter of regulating it but not changing it. He felt that this provision should permeate as a consistent provision; it must not change in some provisions, otherwise this would cause unnecessary confusion.

Mr Macpherson asked where the idea of the 50% split came from. It appeared that royalties was dealt with differently throughout the Bill. There should be a framework for people to contract on how they want royalties to be split. There was a lack of consistency in the royalties split in the Bill – there is a varying way of dealing with the splitting of royalties.

Ms Ntlangwini stated that this also came up during the Subcommittee meeting about needing to reflect on why some of the percentages were put in the Bill – where did the research come from for the determination of the 50/50 split.

Adv Alberts said it was important that artists were protected, but there was no certainty in the law before that there was a resale/reuse right. We need to ensure that we do not harm the industry, but the industry needs to be pushed to ensure that they encourage artists. Therefore, there must be a rational decision behind the royalty split.

Ms Masotja stated that there are serious dire challenges about artists being abused in the industry. In terms of regulation, not much had been provided in the past but for recording and music there was some form of regulation, although they may need to be tightened up. For many years there have been challenges with the royalties. One of the recommendations stemming from the Farlam Report was the 50/50 split for an equitable share of the royalties. The DTI wanted also to provide the right that parties can contract at their own discretion. Failure to do so meant the 50/50 split would then come into effect.

Mr Mahlobo said that it would assist the discussion to be consistent in the research work, language, and core decisions because the Farlam Commission spoke to “equitable” share and that is not the same as 50/50 split. Government has been in court for various transactions to get a declaratory order for "equitable and just", and this is going to cause confusion. The Department needed to make a decision whether the split was going to be “equal” or “equitable” – these words do not mean the same thing.

The Chairperson agreed with Mr Mahlobo.

Mr Mahlobo asked the Department to go back and ascertain whether the Farlam Report recommended “equitable” or “equal”.

Ms Masotja appreciated the input from Mr Mahlobo. She indicated that the principle was that there must be an equal split. The source for the rationale for the 50/50 split was informed by the Farlam Commission, especially for musicians. DTI was prepared to come back to the Committee with a sufficient response.

Mr S Mbuyane (ANC) said that the Committee needed serious research on this matter because the principle was to protect the artist. The Committee must take a decision and have a position, and look at international trends and practices to inform that decision.

Mr Cachalia reiterated that they not discuss flagged items as these were for the Subcommittee to discuss.  

Ms Padayachee indicated that the Farlam Report made a recommendation of a 50% split on needle time and music recordings. The Department will come back to them on how the split will work in the other areas.

Mr Mahlobo said that Mr Cachalia was correct but not entirely. There is one issue that keeps coming up throughout the Bill and it affects other things that need to be done. If it does not get cleared up, the whole exercise would be futile. Now the reference to what Farlam said - it was more limited; but the Bill creates the impression that it is unlimited, that it covers all the other sections. Farlam did a limitation, but now the Department needs to come up with a mechanism to ascertain if it should apply mutatis mutandis. It is important that if something continues bothering, it is asked about but not dwelled on.

Ms Masotja said DTI would like to propose a template contract because many artists did not understand their rights as well as standard terms and conditions. The contracts must be regulated so that it is not a voluntary exercise. Without a template, artists would give away their rights without understanding the terms and conditions. The abuse happens in the contract and it must be regulated so that it is not a voluntary process.

Mr Mahlobo supported the proposal but said that there must be a proviso to allow certain conditions. Secondly, there must be a support mechanism to allow people to enter into valid contracts that will not expose artists to exploitation.

Ms L Theko (ANC) asked the Department to provide clarity on the collecting societies because there were questions that came up in the Subcommittee about them. Collecting societies were receiving royalties but artists were not receiving the monies.

Ms Masotja replied that there is a provision that looks at collecting societies in the Bill; it is covered under clause 25. The administration, regulation and accreditation of collecting societies are all in included.

The Chairperson advised that the Department should go to the Subcommittee meeting prepared because the flagged items would be deliberated on further.

The meeting was adjourned.

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