Copyright Amendment Bill: DTI briefing on Bill and DAC & DTI positions

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Trade, Industry and Competition

31 May 2018
Chairperson: Mr B Radebe (ANC) (Acting)
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Meeting Summary

The Department of Trade and Industry (DTI) gave a briefing on the views of DTI and the Department of Arts and Culture (DAC) on key clauses of the Bill. The Parliamentary Legal Advisor also provided legal advice so the Committee could make its independent decisions on the Bill.

Clauses 2, 3, 4, 6, 8, 9, 10, 11, 12, 14, 19, 20, 21, and 24 were accepted without significant material changes, although in cases discussion and clarification was required. Clauses 7, 13, 22, 23 were flagged, in some cases because additional research was requested.

There was some discussion about the minimum contractual requirements that should be legislated on in clause 5, which dealt with royalties. DA members stressed that contracting should be free that the degree to which the state made rigid specifications for contacts should be limited. However, it was agreed that minimum requirements should be included to protect the vulnerable in society. It was decided that the Bill give authority to the Minister of Trade and Industry to specify the template that contracts must follow although the Bill would include pointers that the Minister must include in the template. 

There was much discussion on “fair use” and “fair dealing” in clause 12. It was agreed that a “hybrid” model would be implemented, which incorporates both a fixed list of specific copyright exemptions, and a more flexible provision which is open to interpretation and may include other uses (not listed) if they are judged “fair”. It was decided that DTI would return within a week with a clearer framework for how the hybrid model would function and how it would be drafted.

In clause 25 Members believed there had to be greater transformation and more vigorous equity in the collecting societies. It was noted that the Companies and Intellectual Property Commission (CIPC) was need to answer relevant questions.

Members asked DTI about progress on establishing a Copyright Tribunal which seemed to be lacking. DTI replied that it was awaiting a Committee decision but said that there needed to be low cost mechanisms to accommodate artists and this should include collaborating with other stakeholders.

Meeting report

Chairperson Fubbs noted a general problem which was that Members submit comments on behalf of their parties but then do not attend the meeting at which the comment is discussed. She advised that Members should appear to support these comments. She added that Parliament had requested that the use of paper be reduced. At this point she excused herself and the Committee elected Mr Radebe as acting chairperson.

Mr B Radebe (ANC), Acting Chairperson, reminded the Committee of its decision for Members to consult their party caucuses on the Copyright Amendment Bill. These would be a report back after Ms Theko gave the Copyright Amendment Bill Subcommittee report.

Ms L Theko (ANC), Subcommittee chairperson, reported that the Subcommittee met with DAC and DTI on 17 May. A number of flagged clauses were discussed and “common ground” has found between DAC and DTI. The Subcommittee had requested DTI to provide a consolidated, detailed report on the discussion.

Mr G Cachalia (DA) agreed with the principle that party caucuses should be consulted. Copyright is a complex matter of international importance that requires consideration from a broader group than just the Subcommittee.

Mr D Macpherson (DA) asked if the Subcommittee had an opinion on fair dealing versus fair use. As legislators, their job is to create law. He felt that the Committee was outsourcing its mandate to the Department. The Committee needs to have a view and not defer responsibility.

The Acting Chairperson explained that the Subcommittee had reached a “stalemate” on certain matters, which required it to seek input from political party caucuses. The parties had reached positions on fair use and fair dealing which resolved the problem. It was expected that the parties provide their opinions after the DTI presentation, but he was happy to hear from them before if Mr Macpherson wanted to have them in mind. He asked Mr Mahlobo to present on behalf of the ANC caucus.

Mr D Mahlobo (ANC) said the ANC had considered the matter of fair use or fair dealing carefully. They noted that each sector is different and requires different treatment. In some cases fair dealing is appropriate; in other cases fair use is more appropriate. Ultimately, after looking at international practices, the ANC was of the view that a “hybrid” model that differentiates was necessary. In cases where use was primarily for commercial purposes, the model needs to protect the most vulnerable. At the same time, the model needs to protect the functioning of the industry. This is why the “hybrid” model was necessary. The exact nature of the model would be clearly defined and capable of protecting vulnerable members of society without undermining productivity.

Dr Evelyn Masotja, Deputy Director-General, DTI, asked the Committee to advise on the format to brief the Committee on the DTI and DAC positions on particular clauses in the Bill.

The Acting Chairperson stated that a clause by clause approach was useful so that agreed clauses could be passed.

Mr Mahlobo agreed but reminded Members that the point of the presentation was also to consider the legal advice provided by Adv van der Merwe (parliamentary legal advisor). He added that where DAC did not agree, it should be noted as such, but that this should not interfere with the mandate of the Committee to make its decisions on the Bill.

Ms Theko proposed that Adv van der Merwe lead the presentation on a clause by clause basis. However, the Acting Chairperson felt that this was against the agenda which stated that DTI would present.

Department of Trade and Industry (DTI) briefing on Bill and DAC & DTI positions
Clause 2
Dr Masotja stated that clause 2 was agreed upon and had no issues.

Clause 3
Dr Masotja stated that Clause 3 discussed works funded by the state and was agreed upon by DAC and DTI. They agreed that the wording “funded by” must be removed.

Mr Mahlobo added that Adv van der Merwe should make input whenever she felt it useful during the presentation.

Mr Williams echoed Ms Theko and requested that Adv van der Merwe lead the Committee through the clauses. It was only necessary to consult the DTI presentation and its input from DAC if the Committee felt a clause was problematic and related to DAC.

Mr S Mbuyane (ANC) disagreed and asked that the Committee stick to the agenda. Adv van der Merwe can make input if she feels it necessary.

Ms P Mantashe (ANC) agreed with Mr Mbuyane that the agenda should be followed.

Mr Cachalia agreed with Mr Williams and Ms Theko that it would be most efficient for Adv van der Merwe to lead.

Mr Mahlobo felt that “discipline” was necessary; let us follow the agenda.

The Acting Chairperson agreed. Adv van der Merwe could provide input on a clause after DTI had spoken.

Clause 4
Ms Masotja continued and said there were no objections to this clause.

Clause 5 Insertion of Section 6A: Royalties regarding literal or musical work
Ms Masotja stated that a concern was raised about the 50/50 split on royalties. This was also raised by DAC. A problem was seen in the scenario where there were more than two parties splitting the royalties. In this case the split needed to be broader – 50/50 did not make sense. It should be equitable. There are also different types of royalties in practice; a single type of split is not appropriate. It is preferable to “respect the contract”. The contract should include minimum standards which need to be developed to provide clarity on royalties. Some wording relating to royalties had not been clearly defined.

Ms Masotja stated that the proposed wording for section 6A1(a) was “In the absence of an agreement to the contrary, no person may reproduce, broadcast, cause the publishing of the work or perform the work in the public as contemplated in section 6 (a) (b) (c) and d without payment of royalty to the owner of the relevant copyright. The amount of any royalty contemplated in paragraph (a) shall be determined by an agreement between the composer, the publisher and the owner of the copyright, or between their representative collective societies. (c) In the absence of an agreement contemplated in paragraph (b), the composer, the publisher or the user of the royalty may refer the matter to the Copyright Tribunal in terms of this Act.”

The Acting Chairperson asked if DAC was satisfied with this clause.

Mr Mahlobo observed that this represented a “major shift” in the approach. Previously, the 50/50 split had been agreed upon. Now the speaker refers to the insertion of an “equitable” principle. This seems like an unnecessary complication. If there are more than two people, the principle of 50/50 is still implied. It refers to a mathematically even split between the number of people in the agreement [so if there are x people, each gets 1/x of the total]. The phrasing “equitable” is less clear than “50/50”.

Mr Macpherson stated that the phrasing [referring to equity] was an improvement. This phrasing gives protection to artists but also allows parties to negotiate a contract based on their position. It is not the role of government to specify automatically what contracts must be entered into. The framework that includes minimum contractual requirements is satisfactory and can be gazetted by the Minister. This would represent the correct level of government intervention; it is not too involved in the contract itself which would be wrong. It also solves the problem of there being more than two parties.

Adv van der Merwe felt that there was a problem with the wording of clause 5. It sounds as though parties could contract out of paying a royalty at all. To her understanding the Committee wants there to be contractual freedom but there must be some form of payment. If this interpretation is correct, this should be mentioned explicitly in the clause. A payment could be included in the listed contractual minimums. Currently paragraph (a) reads: “In the absence of an agreement to the contrary” …you may not use the work without payment. This suggests that you could get away with not paying a royalty. Paragraph (a) should be changed to read “Notwithstanding the transfer of copyright as in 6A” and then continue.

Ms Mantashe was satisfied by Adv Van De Merwe’s interpretation and rewording.

Dr Masotja stated that the Committee needed to look into the minimum contractual requirements. The requirement for sharing of the split of royalties was not yet clear. The minimum rights of parties in the contract need to be articulated properly. Including the term of the contract was another example.

The Acting Chairperson asked if there were any minimum requirements for contracts that had been left out. He reminded that so far, the following requirements had been proposed: dispute resolution, term of contract, exist clauses for artists, sharing splits, and rights of parties. He added that creators must get royalties and be protected; anything that threatens them must be “extinguished”.

Adv Alberts (FF+) understood the clause to enforce that a royalty is payable, without imposing an exact amount, which would be left to negotiation. To him protection was necessary as artists were often “taken for a ride” in the industry. He felt that the reformulated clause 5 was fair. Large corporations steal the most and they must be “taken to task” in some way. He had considered differentiating in the law depending on the financial size of the contract, so that larger firms are more tightly regulated. Investments are risky and small players may not be able to afford the royalty at first, especially if they require more time to make a profit. An exception may be appropriate in this case. However, in the case of commissioned works, for example if a large production firm such as the South African Broadcasting Corporation (SABC) commissions a work, because there is already a distribution platform in place as part of the product, a royalty can be immediately required.

Mr Cachalia asked if the points listed [the minimum requirements mentioned by the chair] were meant to be part of a template or actual requirements. The idea to him was more to highlight to the vulnerable those issues that they must apply their mind to [and not to stipulate the actual contractual contents]. Does an individual not have a right to waive the contract and simply hand out their work pro bono? To him, these items were supposed to function as reminders to the artist contracting, not instructions.

Mr Williams felt that the minimum contractual requirements were important. He agreed with Mr Cachalia; the Committee must not dictate individual’s behaviour. If an individual wants to distribute their material for free, they should be entitled to. He did not feel that special clauses for small companies were necessary. The minimum requirements would be satisfactory.

The Acting Chairperson stated that the minimum requirements led to a template. The important question at this point was whether there was something that the Committee had left out.

Ms Mantashe agreed with the minimum requirements listed. She asked whether this clause would work retrospectively to undo “oppression” from the past.

Adv van der Merwe stated that there were two ways to do the template. The most accepted and common is to require by regulation that the Minister of Trade and Industry provides a template. This is the easy way. The second way is for the Committee to provide the template as a schedule to the Act. This is more complicated as amending the template then requires amending the Act. This is why requiring the Minister to provide the template is more flexible.

Adv van der Merwe stated that retrospectivity is difficult as implementing it will to an extent clash with property rights and the freedom of association. This will lead to matters being taken to the Constitutional Court. To her, a good balance might be to say that current contracts that are in place going forward must be renegotiated when the Bill is passed.

The Acting Chairperson stated that Committee should give the Minister the authority to make the template but still to stipulate in the Bill some minimums the Minister must include. These can be “brought back to the Committee” [amended in the Act via another Bill] if necessary. He agreed with Adv van der Merwe ; renegotiating of current contracts was satisfactory. It was necessary to avoid running into constitutional challenges if the Bill was fully retrospective. He asked if the Committee was satisfied with these proposals?

The Committee was satisfied with the proposals for clause 5.

Clause 6
Ms Masotja stated that clause 6 dealt with the communication of artistic work to the public, and that there were no issues with this clause.

Clause 7
Ms Masotja stated that clause 7 inserted Section 7A: Royalties for artistic works. However, a decision had been taken to delete 7A and rather introduce the Artistic Resale Right (ARR) royalty. Artistic works are different to other types of copyrighted works. The revenue stream from artistic works is unique and mainly based on sales. The ARR ensure that royalties are paid for artistic works. DTI proposes that 7A is not inserted, as it does not apply appropriately in the case of artistic works. These works should rather get their own royalty under the ARR. Briefly, the ARR is useful in South Africa (RSA) because South African copyright law is based on British law. In the United Kingdom, the royalty depends on the resale price, and is worked out according to a sliding scale from 4% to 0.25%, with various thresholds. RSA can consider an analogous system. In Canada, the United States of America and Senegal, there is a fixed rate, which is prescribed in legislation. DAC is proposing that RSA takes on the Senegalese fixed rate system with the rate prescribed in legislation. DTI differs, and has suggested that the DTI and DAC Ministers meet to discuss the alternatives. There is still dispute on this, but the Ministers could reach agreement. Regardless, artistic work is different in nature and requires its own ARR; 7A should not be inserted.

The Acting Chairperson stated that RSA law is based on UK law due to colonisation. He agreed that it was necessary to differentiate the type of art. Visual art differs from other art forms. The Committee needs to decide between the proposals of DAC and DTI to find the most appropriate model.

Mr Cachalia stated that it was a vexing issue. It is not as clear cut as it seems. The Committee needs to consider the case of visual art works closely at a later point.

Mr Mbuyane agreed. The Committee would need more time to “apply its mind” and find common ground. He requested that Adv van der Merwe investigate the problem and be ready to provide input.

The Acting Chairperson agreed but felt that the matter could not be kept “in limbo” forever. Would it be reasonable for the Departments to provide their input on 5 June?

Dr Masotja stated that there had already been lengthy discussion, but no common ground was found. She felt that it would not be resolved between the Departments and that research and input elsewhere [presumably by Adv van der Merwe or the Ministers] was necessary.

The Acting Chairperson felt that the matter needed to be decided by 6 June.

Adv van der Merwe explained that the reproduction of artistic work was already set out in Section 7 of the Act. She read Section 7 of the Act: “copyright in an artistic work vests the exclusive right to do or authorise the doing of any of the following acts:
a) reproducing the work in any manner or form;
b) publishing the work if it was unpublished;
c) performing the work in public;
d) including the work in a cinematograph form or a television broadcast;
e) causing the work to be transmitted in a diffusion service, unless such service transmits a lawful broadcast, including the work, and is operated by the original broadcaster;
f) making an adaptation of the work;
g) doing, in relation to an adaptation of the work, any of the acts specified in relation to the work in paragraphs (a) to (e) inclusive”.

Adv van der Merwe did not agree with DTI that the main revenue stream was from sales. There are other revenue streams from artistic works beyond resale royalties. Consider an example. I buy your painting for R10. I then shoot a movie where the painting is in the background of the film. Another example is that I make prints of your painting and sell them as posters. These are more complicated examples than simple resale. Should there not be a split of royalties in this case? Artistic works are specialised and the Committee needs to understand how Section 7 of the Act ties in with 7A of the Bill. Only if it is congruent with Section 7 from the Act can it be included.

Adv Alberts gave another example. A film set that is built is also an artistic work. The issue is complex; not only does the film include other works, but the set itself is an artistic work. Artistic works interact in this way which complicates the matter.

Mr Cachalia stated that the matter spoke to fair use and fair dealing. It is also a question of where ownership vests.

Dr Masotja stated that DTI had only considered this matter in terms of resale rights. This is a specialised area. The broader reproduction of the work is a different and further consideration. 7A discussed royalty payments and includes a 50/50 split which has also been questioned. So both the reproduction and the resale are problematic in 7A.

The Acting Chairperson felt that clause 7 was problematic and was also bordering on fair use and fair dealing. It would be preferable to return to this matter next week.

Dr Masotja explained that a proposed 7B would insert a resale royalty right about artistic works. DAC was concerned about the reciprocity principle. DAC felt that 7B(a) requires the resale of royalties be given to RSA citizens or residents. DAC was concerned that this undermined the principle of reciprocity. DTI requested that this be further investigated. Under the proposed system, RSA will determine the number of permits granted to nationals of another country. The country then determines the number of permits it will grant to RSA. The World Trade Organisation (WTO) allows for the reciprocity of Intellectual Property (IP) rights. DAC is proposing that reciprocity be added. DTI has not formulated a position on this.

Adv van der Merwe stated that the reciprocity principle is “exactly correct”. We cannot undermine international agreements. A clause should be included to the following effect: “if another country offers this benefit to RSA citizens, then their citizens are granted the same benefit.”

Mr Mbuyane stated that DAC is correct.

Mr Cachalia asked if creators of visual art receive a royalty each time their art is resold? He was not sure the Committee had agreed on this. This has significant implications. The Committee should ensure that the templates are in place for sound initial contracts. If someone negotiates for too little in the initial contract, they should not be entitled to renegotiate upwards at each resale.

The Acting Chairperson stated that international best practices are important. The principle of reciprocity is agreed upon.

Dr Masotja stated that the insertion of 7C (proof of the author) is agreed upon.

Adv Alberts felt that there was a problem with 7C. Say an artist pitches an idea to a production company. The company can say it is uninterested, but then steal the idea. In the USA the Library of Congress has a voluntary online database where you can submit your idea for permanent record to prove that you were the creator. RSA should provide a similar service which facilitates creating such proofs for literary works. The service provides a certificate stating that you had proposed the idea on a certain date. This would help a lot for artists whose ideas are hijacked by larger corporations.

The Acting Chairperson asked Adv Alberts to provide a reference to the website so that Members could investigate it themselves.

Dr Masotja stated that 7D inserts resale rights. DAC proposed that the focus be on visual artists. The clause also proposes that the resale right expires 50 years after the death of the author. This is in line with international best practice.

Dr Masotja stated that 7E insert talks to the transmission of resale royalty rights. There was a question of the use of traditional knowledge. DTI and the Department of Science and Technology (DST) agreed that community trusts and indigenous communities should be removed from the Bill as they have their own institutional mechanisms in the Companies and Intellectual Property Commission (CIPC) and the DST.

The Acting Chairperson stated that the Committee agreed that the CIPC and the Department of Science and Technology could deal with these cases, and that community trusts could be removed from 7E.

Adv van der Merwe cautioned Members from referring to institutions such as the DST institution that had not yet been enacted [National Indigenous Knowledge Systems Office / National Council for Indigenous Knowledge]. The current provision refers these cases to the Intellectual Property Laws Amendment Bill. Another option is to leave all reference to indigenous cultural expression from the Bill. This would mean that the laws that applied to these cases would be implied; these works are still included under the law but not expressly referred to. This could be dealt with operationally and parties made of aware of this implication, although it did create vagueness in the legislation.

The Acting Chairperson stated that law by its nature must create certainty but that the problem really related to a serious “structural challenge” that was beyond the power of the Committee to solve. He suggested that Adv van der Merwe investigate further for a means to protect traditional knowledge and intellectual property in the interim before the DST Bill Protection, Promotion, Development and Management of Indigenous Knowledge Systems was completed.

Ms Mantashe agreed with this proposal. The matter related to her previous question asking what would happen to those artists who had already lost out on their royalties. Retrospectivity could help these artists; redress for the past is important.

The Acting Chairperson stated that the clause would be returned to.

Clause 8 Amending Section 8: Nature of copyright in audio-visual works
Dr Masotja stated that the word “film” is replaced with “work”.

Clause 9 Inserting Section 8A
Dr Masotja stated that clause 9 approaches the matter of royalties following the same principle as clause 5 leaving the 50/50 split in favour of the “equitable” approach, with minimal requirements. The wording needed to be adjusted.

Adv van der Merwe stated that 8A and 6A were very similar and simply refer to different types of works. The wording from 6A could be copied and repeated in 8A, only with the type of work changed.

Clause 10 Amending Section 9
Dr Masotja stated that clause 9 was agreed upon.

Clause 11
Dr Masotja stated that clause 11 dealt with the important issue of needle time. The industry and collecting societies have stated that they are happy with the 50/50 split. 50/50 is appropriate in this instance.

Mr Mbuyane asked which companies dealt with collecting societies on this issue.

Dr Masotja responded that the South African Music Performance Rights Association (SAMPRA) and the Independent Music Performance Rights Association (IMPRA) distribute royalties on needle time. She also recommended that broadcasters keep log sheets to ensure that music that is used is paid for. This assists the collecting societies in distributing royalties and paying people appropriately. The proposed clause read: “Any person intending to perform any act contemplated in Section 9 (c), (d) and (e) must at any time when performing, register the act in a log sheet and submit a report to the performer, copyright owner, collecting society as the case may be in the prescribed manner, keep record of information in respect of the use of sound recording and furnish it to the performer, copyright owner or collecting society, to enable the collecting society to comply with its obligations under the Copyright Act, 1978, Performers Protection Act, 1967.”

The Acting Chairperson stated that Members were generally in agreement on this clause.

Dr Masotja added that DAC was concerned that the clause was not clear about who a user is.

Dr Masotja explained that the clause leaves responsibility for payment of royalties in the hands of collecting societies. Regulation will require that agreements contain the terms of payments. Those who do not belong to collecting societies will be responsible for managing their own royalties.

Mr Mbuyane felt that all artists must “belong somewhere”. Creators should belong to collecting societies and these must be registered. Otherwise the payments are essentially unrecorded which is problematic for tax purposes for example.

Ms Theko agreed that everybody should “belong somewhere”. The Committee should explore the options. If an artist is independent, their activity needs to still be considered and regulated by the law. This clause should be flagged.

The Acting Chairperson stated that imposing that all individuals must belong to a society is an infringement on the freedom of association. If someone “wants to go it alone” they are entitled to do so.

Ms Mantashe agreed with the chairperson but felt that the industry needed a way to regulate collecting societies to avoid their exploitation of artists. The Bill needs to consider this and have a provision. Her worry was that collecting societies would otherwise oppress artists.

Dr Masotja stated that the matter [the regulation of collecting societies] was covered in clause 25 1A.

The Acting Chairperson stated that clause 11 was satisfactory to the Committee if this matter was covered elsewhere.

Clause 12
Dr Masotja reminded Members of the principles of fair use and fair dealing. Fair dealing operates by exempting the use of copyright works for certain statutorily-defined purposes and only relates to particular types of works. Fair dealing is a closed list of specific exceptions. There is no statutory definition of what dealing is fair. She noted that despite the existence of exceptions for purposes of illustration for teaching and research, the legal uncertainty surrounding the use of works has led to the conclusion of agreements between the collecting societies and educational establishments to the financial detriment of the latter.

Dr Masotja explained fair use. Fair Use is a doctrine under copyright law that permits certain uses of a work without the copyright holder’s permission. Fair use exceptions include but are not limited to criticism, parody, comment, news reporting, teaching, scholarship, or research. It allows users to make use of copyright work without permission or payment when the benefit to society outweighs the cost to the copyright holder. Some see fair use as too open to abuse as it permits the use of works without permission. On the other hands, it promotes innovation, access and transparency which can help an economy develop.

Dr Masotja explained the hybrid model, which combines the two principles. She provided the example of the Singaporean hybrid model. The Singaporean model is based on the USA’s fair use provisions. The US provisions of Fair Use are open. Openness refers to the fact that that the exception is flexible, and that the exception can apply potentially to any purpose and this model is followed in the US, Israel, Malaysia and other countries. By contrast, “closed” refers to list systems like RSA’s current fair dealing principle where there is a fixed list of exemptions. It may be argued that it does not matter what you call the clauses but rather how far you “open up” the exception clause. If you start with a fair dealing clause, and then add to it, you are opening the clause, and this is the hybrid mode.

Dr Masotja elaborated on the Singapore model. It can be described as hybrid; it applied a fair dealing exception, but this was opened when Singapore drafted the US fair use provision and added the words ‘such as’. As such, it involves a mixture of the general fair use style, combined with more specific fair dealing style requirements. Using both would require balancing the rigidity and certainty of one with the flexibility and uncertainty of the other. DTI is in favour of the hybrid model, which would not risk cutting off important access that improves society, such as research, education, or that for the visually impaired, for example. 

Ms Theko stated that the ANC study group was in favour of the hybrid model. Flexibility is useful. She added that some of the confusion had really arisen due to semantics; the “fair use” vs “fair dealing” binary was too rigid and misleading.

The Acting Chairperson stated that the ANC view agreed with DTI’s view in the presentation. The question now is how the hybrid model would function; when would these principles be incurred? Incurrence is important; the matter would have to be taken further.  

Adv Alberts stated that the Committee needed to reflect further on fair dealing. Importing a provision from the US when RSA does not have the same legal precedent in the courts is unwise. He felt that fair use alone was too weak and such legislation left the poor vulnerable. If the Bill was too vague these people would not have the funds to take matters to court themselves. A list system is probably the most useful because it limits the exceptions while also creating certainty which helps companies and agents plan. The Committee would then also need to decide upon a formula that determines the amount a work can be used. For example, students referring to a textbook – how much of it can be replicated?

The Acting Chairperson explained that it is a balance between facilitating access and rewarding the creators of the content.

Mr Macpherson commented that this debate could go on forever. He agreed that the US already had a large body of court precedent that had defined what is and what is not fair and what should be included or excluded in terms of the provision. He was wary of adopting other countries’ solutions given that RSA is a very “unique” market. Nuance is required to balance rights and access. Balancing protection and sharing crucially requires specificity of the exclusions. He proposed that the Subcommittee or the Committee itself start working towards a specific list of inclusions and exclusions. This would formalise the discussion, which he felt was too broad.

The Acting Chairperson stated that RSA is an unequal society with a great need for education materials. At the same time, IP rights are important as they create incentives for innovation. Innovation is crucial, and RSA needs to be competitive, while also protecting the most vulnerable.

Ms Mantashe proposed that the other political parties consult their caucuses on the matter. The ANC wanted the law to be incurred “around the sales”. But they were interested to hear from other parties.   

Mr Mbuyane agreed. The DA should be consulted and provide its own proposals.

The Acting Chairperson felt that further work was necessary and agreed that the party caucuses and the Subcommittee should look into the matter. He clarified that the Subcommittee was not yet dissolved and could investigate this. He felt that there was little use in pressing the matter in the present meeting as further deliberation was needed.

Mr Cachalia felt that the Subcommittee needed to review the matter. There are party differences and the caucuses will naturally produce different opinions. They can be consulted. 

The Acting Chairperson felt that Mr Cachalia’s comment was valid [the Committee and Subcommittee can deal with the matter without additional external consultation]. There was convergence around the hybrid approach. The question that remains is how the principles will be incurred. As Ms Mantashe made clear, the ANC wanted incurrence based on sales. He asked Adv van der Merwe to investigate how the hybrid model could be operationalised in a way that found middle ground between the opinions that had been raised.

Adv van der Merwe felt that it was outside of her capacity as it represented a policy decision. The matter should be referred to DTI. DTI can take the clauses that exist and indicate what changes are necessary to change the current Bill into a hybrid system. She added that the Bill is in some sense a hybrid system already.

Dr Masotja stated that she would highlight where this change might apply throughout the remainer of the presentation. 

The Acting Chairperson asked DTI delegates if they could provide ideas for the hybrid model by the following week. 

Dr Masotja stated that DTI would “have something” by the next week.

Clause 12 Substituting Section 11: Nature of copyright in programme-carrying signal
Dr Masotja explained that this referred to a signal embodying a program which is released through a satellite. Copyright in programme carrying signal vests exclusive right to undertake or to authorize, among other things, the communication of the work by wire or wireless means to the public. There was no contestation about this clause. 

Clause 13
Dr Masotja discussed clause 13 which repeals Section 12: Fair dealing. She noted that DAC had raised similar concerns to what Members had previously expressed about fair use. DTI also took the position that fair use was too open and risked abuse. DTI suggested fair dealing with flexibility as discussed. DAC was concerned about the personal use/private use of copyright material, for example if material is distributed online without permission.  A private copy-levy was proposed by DAC; DTI has no policy position on this proposal. It could be included if the Subcommittee wants it.

Dr Masotja clarified that a fair-dealing type clause must remain if the decision is to disregard fair use as agreed.

Mr Mbuyane explained that the Committee did not need to overly concern itself with the DAC input on fair use. The Committee could decide on this matter itself. What remains is to clarify when fair use would be incurred.

Dr Masotja cautioned Members on their use of language. The Committee needs to take a consistent stance on what the Bill includes. Would the phrasing include “fair dealing” or “fair use” or both? Is the term “hybrid” appropriate to be included in the Bill? Her advice was to leave the term “fair dealing” for the present, until the technicalities of the hybrid had been dealt with. 

The Acting Chairperson explained that the Act referred to fair dealing, whereas the Bill refers to fair use.

Dr Masotja explained that the decision had been made to avoid fair use, and that is why the Bill is retaining what is in the original Act [fair dealing]. She stated: “we are not going for fair use”.

Ms Mantashe was displeased that Dr Masotja suggested DTI was making the final decision. She asked Dr Masotja to withdraw the comment that the DTI “wont” [note: Dr Masotja did not use the word ‘won’t’]. The Committee makes legislation not DTI.

Dr Masotja stated that Ms Mantashe may have misheard. She wanted to clarify her previous comment and explained as follows: “We have a bill - it talks about fair use. We have the principal Act – it talks about fair dealing. If we are adopting a hybrid model, for now in the Bill we will have to consider what is in the principal Act, which is fair dealing. I am saying – we need to look at how the hybrid will have to come in the Bill”.

The Acting Chairperson was satisfied by this explanation. This approach was not contentious.    

Mr Mbuyane agreed, but reminded Members of how the situation had developed.  There was initially a challenge with fair dealing and this led to the current format in the Bill, which addressed the challenge. The Bill needs to overcome this challenge and it was agreed that fair use was not sufficient. He agreed that the Department must withdraw “won’t”. Law must be changed to protect the vulnerable.

Ms Theko stated that Dr Masotja was confusing the Committee. Her role is to present the report and let the Committee make decisions. Her role is to inform and advise; Ms Theko did not accept “won’t”. DTI must be more careful with wording.

The Acting Chairperson asked if this had any implications for the Bill. Can the Bill be left as is?  

Adv van der Merwe explained the “B” Bill which was the latest version. The Act had exceptions specifically for literary and musical works. The Bill introduced fair use principles under literary and musical works, but this was not the intention of the Committee. The Committee wants to create a hybrid model that covers all works. So, it was decided that Section 12 should be deleted and the necessary provisions repeated in the following section. The Bill lists various specific instances under Section 12.

Adv van der Merwe explained that page 14 of the latest version of the Bill needs to be looked at, specifically Section 12(b). This paragraph reads “in determining whether an act done in relation to a work constitutes fair dealing or fair use, all relevant factors shall be taken into account, including but not limited to-”. It goes on to describe the four pillars of fair use. She felt the paragraph may need to be reworded. If Members maintain the specific exceptions as under 12A and 12B for example, as well as the fair use clause, it will already be hybrid. DTI will have to consider whether the lists given were sufficient, and whether the paragraph that covers fair use is still applicable. It may be desirable to restrict fair use.

The Acting Chairperson felt that this explanation was useful and provided clarity. DTI had work to do.

Dr Masotja stated that her comments were trying to provide clarity and did not intend to disrespect.

Ms Mantashe accepted this apology.  

Clause 14 Inserting Sections 12A, 12B, 12C and 12D: General exceptions from copyright protection
Dr Masotja said the wording “underserved population” was creating confusion and could be removed. Most of the comments on this clause had to do with drafting and not material changes.

Clause 19 Inserting Section 19B: General exceptions for protection of computer programs
Dr Masotja skipped to clause 19 and said DTI supports the broadening of the use as this will advantage the educational sector on platforms such as eLearning.

Clause 20 Inserting Section 19C and Section 19D
Dr Masotja stated that Section 19C deals with general exceptions for protection of copyright work for libraries, archives, museums and galleries. DAC noted that libraries, archives, museums, and galleries differ in terms of the type of materials accessed and held. The Bill treats libraries and archives as the same which is problematic. DTI noted however that international best practice puts these together. DAC felt that private galleries should be distinguished from public galleries. DTI wanted to include this distinction in the Bill.

Mr Macpherson appeared to agree that the Bill should distinguish public as opposed to private galleries.

Dr Masotja explained that 19D deals with exceptions that protect people with disabilities. This provision allows for any person serving persons with disabilities to make accessible format copy for the benefit of persons with disability without authorization. The person making an accessible format must have lawful access to the copyright work, must convert the work into accessible format copy and must not introduce changes except those needed to make work accessible to persons with disability. It must not be for commercial purposes.

Mr Macpherson wanted clarity on the meaning of this provision. Could an international book such as Harry Potter be transposed into braille in South Africa without permission?

Dr Masotja replied that the intention of the provision is to protect the disabled. Access is expensive to them. This is especially important in education.

Mr Williams stated that Mr Macpherson’s question was important and must be answered. This should not be in legislation because it is problematic. Mr Macpherson reveals a loophole – if the intention is not to create such loopholes, legislation must explicitly rule them out.

Mr Macpherson stated that he did not want to create difficulties but to create sound legislation. A definite list of inclusions and exclusions in this regard would be helpful.

The Acting Chairperson stated that the list will be created [presumably by DTI].

Clause 21 Amending Section 20: Moral work.
Dr Masotja introduced Clause 21 which allows the author of work a right to claim authorship and object to any distortion, mutilation or modification of the work where an action seeks to prejudice the honour or reputation of the author. Inputs were made by DAC which support provisions for such moral rights of copyright holders. Authors’ works should not be degraded. Legislation needs to support the bargaining power of authors when their rights are infringed.

Adv Alberts stated that it was necessary to clarify what the moral rights were. Where is the line between a parody and a mutilation? There is no legal precedent for this distinction. Another question is whether moral rights can be waived. Can an author waive their moral rights? 

Mr Macpherson’s view was that moral rights were incredibly subjective. Whether or not someone considers something a mutilation will depend on their personal interests. This is related to what Adv Alberts has just said. If the law is going to include moral rights, they must be anchored on a belief, which allows them to then be subjective. 

Dr Masotja explained that the intention behind the moral right is that the artist’s work is not misused in a way that affects their dignity. Think of it in terms of the freedom of association principle. People are free to make an agreement with anyone, for example a comedian, to use their work. It is true that it is a subjective area and the law will be interpreted in different ways. There is an issue of clarity that DTI needs to investigate here. She reiterated that it is important for law to protect authors’ moral rights and provide remedies when their rights are infringed.

Mr Cachalia felt that the Committee would have to revisit moral rights. He agreed with Mr Macpherson, stating “moral rights” is a nebulous concept. Again, it may be necessary to consider where ownership vests. If I own something, what are the implications of ownership in terms of reproduction and so on? Ownership is key and must be defined clearly.

Ms Pregoria Mabaso-Muvhango, DTI Director: Legislative Drafting, reminded Members that moral rights exist in the principal Act. It is not novel in the Bill; the Bill only changes these rights to apply to sound recordings.

Adv van der Merwe stated that the clause was very lengthy. The nature of the moral right is that it only applies to the author and not people that buy the art for example. The right of the author is to either to claim ownership and/or to object to any distortion or modification of the work, providing the distortion or modification is or would be prejudicial to the honour or reputation of the author. So it is quite a specific provision. There is a further condition: if the author authorizes the work to be used elsewhere, their moral right may be waived if the modifications done were necessary for the use of the work. The author has a right to object, but this does not mean the contract has automatically been breached. It depends on the nature of the distortion or modification. If an author agrees to a certain use, such as a parody, they can later object to the use, but the purpose to which they consented is relevant to the judge’s decision. It is not an unlimited right.

Adv Albert referred to the “Laugh It Off” case. Judge Albie Sachs essentially said that there was no problem with the parody of any work or product without permission. This type of parody happens frequently in the USA in many formats. Court precedent should be considered in the formulation of the Bill.

Mr Cachalia asked, “Does this exclude visual art?”

Adv van der Merwe replied that it does not exclude visual arts

Mr Cachalia stated that this creates a problem. Consider students that copy a work such as a painting or a sculpture. If a moral right is incurred, as in, the author says the work is insulting – what happens? Another example is when someone buys an expensive work, copies it, and then sells the original and keeps the copy to display. There are even businesses that specialise in creating copies of artworks. Where does this fall in regard to moral rights?

Mr Williams stated that such exceptions could be added to the exceptions list in the hybrid model. Students are an obvious exception.

Adv van der Merwe reminded them of Section 12A’s general exceptions, reading “in addition to uses specifically authorised, fair use in respect of a work or the performance of that work, for the following purposes, does not infringe copyright”. Teaching and education are in the list of exceptions. There are a number of other factors that are considered when a judge determines if the use is fair. Parody is also among them.

The Acting Chairperson appeared satisfied with the clause. 

Clause 22
Dr Masotja said this dealt with commissioned works. DAC differed from DTI on this. DTI suggested that the commissioner should own the copyright. DAC felt that the fact that the commissioner was paying should not give them so much power in owning the work. The creator needed more rights relative to the commissioner. DTI had flagged this and was happy for the Committee to make a determination on this clause.

The Acting Chairperson stated that it was a balancing act.

Dr Masotja explained that the expression is the determining factor. The creativity is owned by the author. DAC is proposing more power is given to the creator.

Mr Williams said it makes sense that the commissioner owns something if they paid for it. The problem comes when the work is then used widely, for example if replications are made. His view is that the law should then give the author more power to negotiate in the contract, to cover the scenario where their work would become more widely borrowed from.

Mr Cachalia’s view was that it should be open to contract only. If I buy something, say I burn it, surely this is my prerogative? What happens to moral right in this case? Moral rights should not interfere with free contracting. This is the beauty of contract – it can cover anything it needs to.

Adv Alberts provided the example of a feature film, where the film includes other works of art within it. Let us say HBO wants to own all the rights to the art in the films it produces. HBO will not be attracted to RSA if there is a law that could interfere with the ability to own these rights. Another troubling example is a soundtrack for a film. The current Act says that a soundtrack is deemed to be part of the film. Imagine if a studio could not distribute a film because a musician felt their work (the soundtrack) was being misused. This will deter investment. Investors such as HBO need certainty about ownership; and policy certainty in general. He added that a licencing agreement might work. In this case, the commissioning is done, ownership is then relinquished, but a royalty is owed to the artist. Take SABC for example. They might not be able to sell their products internationally if there is a legal issue surrounding moral rights. This is a sensitive area.

Mr Macpherson stated that commissioning should be a contractual discussion between two parties. He provided another scenario. What if a commissioner decided they did not want to use a work that they had commissioned; would the artist then retain a right to the work? Would they refund the commissioner? These are complicated issues. To Mr Macpherson, commission implies that the commissioner obtains the ownership of and rights to the work. The discussion becomes problematic when we move too far from facilitating contractual agreements in the market. Legislation is too rigid to deal with the wide variety of scenarios that can arise. 

The Acting Chairperson stated that the Committee was “on thin ice”. He agreed with Mr Macpherson that much depended on the particular situation.

Mr Williams stated that the problem with free contracting is that there is a power asymmetry due to the superior legal access and resources of larger firms. Free contracting does not protect individuals and smaller firms. This exact problem had been raised in front of the Committee in the public hearings.  

The Acting Chairperson stressed that balance was necessary.

Adv van der Merwe noted that the presentation refers to the Canadian system, which works opposite to Mr Macpherson’s formulation of commission. In Canada, the creator owns the work, and the commissioner obtains a licence to use it in certain ways. Problems arise when the commissioner exceeds the uses it was allowed in the contract.

Mr Mbuyane sought clarity on what is regarded as a commissioned work. Does the agreement have to exist before the work is created? For example, if the creator asks for a corporation to publicise their work, and the work is already complete but not yet in public, is this commission?

Dr Masotja suggested that commission is the case when the payment occurs before the work is created. Revenues then accrue back when the work is completed. For example, if the government commissions research, it pays researchers, the research is done, and the government then holds the rights to use it for commercial purposes.

Clause 23 Amending Section 22: Government funded work and ownership of the work
Dr Masotja said that DAC proposed that clear rights management be introduced. Its view was that records were being exploited commercially by researchers who make the work available online. DTI flagged this area to be strengthened. It amounts to piracy of state owned materials.

Mr Williams felt that the section was confusing and concerning. The previous section sought to protect the creator. Now this section says, if it is the state that is commissioning, the commissioner must be protected. Why does the state get protected when it is commissioner, but the author is protected when anyone else commissions? If anyone can protect themselves in free contract, the State can. How would this relate to the previous clause?

The Acting Chairperson stated that the state should protect itself through the law. 

Adv van der Merwe explained that the clause did not directly deal with state ownership. This clause is more to do with state holding copyright so that the work cannot be transferred. This clause simply says: “if government owns something, it cannot be assignment”. She is not saying that Mr Williams’ concern is invalid but simply that it applies to a different clause. 

Dr Masotja stated that if there was an exploitation of state owned works as in the research example, this would have to be followed up on at a later stage [and elsewhere in the Bill].

Dr Masotja explained another issue in clause 23. There is a period after which rights can be returned to the composer. Any assignment of copyright work must be in writing and assignment shall be valid for a period of 25 years from the date of agreement of such assignment. This provision applies to composers which must be made clear. The drafting team proposed that this read “up to 25 years”.

Adv van der Merwe explained that the public raised the case where a person may want to assign for fewer than 25 years. This is where the drafter’s proposal came from. The Bill must be amended to reflect that it only refers to composers; currently it is implied that it applies to everyone.

The Committee was satisfied with these proposals.

Adv Alberts again gave the example of feature films and soundtracks. Elsewhere the period is 50 years. The Bill will require production companies to renegotiate every twenty-five years. This is an obstacle in the flow of commercial rights going forward. It may be wise to make exceptions in this regard.

Mr Williams did not think the international cases were as important as the goal to protect South African composers. South Africans should not have fewer rights simply because people elsewhere do.

The Acting Chairperson provided the example of the Lion King soundtrack. The movie became an international success – were the African composers protected? 

Adv Alberts stated that the soundtrack to the Ling King was stolen and not paid for. Disney then lost the case in court; the courts do protect authors in this respect. Ideally the author and the production company should negotiate a royalty agreement which covers different scenarios, including international distribution. A balance is necessary to protect citizens and encourage investment.

The Acting Chairperson stated that there are many international films made in South Africa; a fine line is being walked.

Clause 24
Dr Masotja explained that this covers orphan works, where the rights holder cannot be located. This was discussed extensively in public hearings. DAC felt that the amendments did not clarify how the income will be distributed or used in cases when the rightful owners could not be identified. It is a provision that DAC would avoid if possible. Another question was why the provision was limited to five years. DTI proposed that the limit be removed. A copyright owner should always be able to recover royalties. It was not exactly clear how this would be operationalised, but fair use might cover this and simplify the problem.

Mr Williams asked to what degree the search for the author is legislated? In other words, if someone simply made one phone call and then declared the author unlocatable, does the law imply this is a sufficient search? Does the law stipulate the search must be reasonable in some way?

Dr Masotja replied that clause had been discussed extensively and the process was an issue. This is why it was decided to leave it to be covered by fair use.  

The Acting Chairperson stressed that the process needed to be vigorous.

Adv van der Merwe explained that currently the Section 22A(2), it says if this applicant wants to apply to use an orphan work, the application must be published in the Government Gazette in English and another language, as well as in two daily newspapers, in any official language”. Section 22A(6) states that the Commission cannot issue a licence unless it is satisfied that the applicant has done the following in attempting to contact the copyright owner.  What follows is a list of about five things that must be done. A search of the copyright registration database is one of the requirements. The search must consider the reasonably available sources of copyright and ownership information, and where appropriate, licence information.  The search must include reasonably available technological tools. It must enlist assistance where reasonable. Reasonable and appropriate actions may be taken in light of facts reasonably available to the application, including non-public records. These are some of the requirements; they are rigorous, and some feel they are too demanding. Perhaps after the hybrid model is finalised, it will be clearer how the use of orphan works should be treated. If it is then covered by the hybrid, the more onerous search provision mentioned here can be removed.

The Acting Chairperson was satisfied with this approach. 

Afternoon session

Clause 25: Collecting Societies Registration and Accreditation

Mr Williams said that collecting societies currently are controlled by white people. As we are moving towards a transformative society; we should allow other role players to be part of a collecting society. There should be vigorous equity in the collecting society especially allowing space for black economic empowerment.

Ms Theko asked why the Companies and Intellectual Property Commission (CIPC) did not manage to be present in the meeting. The Committee did not receive any formal apology from CIPC.

Dr Masotja replied that CIPC mentioned that they would not be able to make it to the meeting today because of the changes that were made in scheduling today’s meeting.  

The Acting Chairperson replied that the Committee accepted the apology of CIPC since it was the Committee that changed its programme. It was made clear to CIPC that it needed to be present in the meeting on 5, 6 and 7 June next week. The Committee would be discussing the core mandate of CIPC.

Mr Mbuyane suggested that perhaps the Committee should not deal with the matter in detail since CIPC was not present in the meeting today. The Committee should perhaps finalise the document by the Department by 7 June.

Dr Masotja responded that investigations are taking place concerning the confusion around the members of the collecting society. There are cases where there are similar members of the collecting society. There should be a look into the payment of royalties. 

Mr Williams mentioned that most collecting agencies that would benefit would be those that had benefited in the past during the apartheid era and this is something that needed to be addressed. The most powerful collecting agencies at the moment are mostly those that benefited during the apartheid regime. It is clear that we are not going to have any transformation if we do not open up the industry so that as many people can participate so that the winner could be the most successful business.

Mr Mantashe said that there should be transformation in the sector and there should also be competition to allow other players to participate. The Committee should know the challenges that are experienced by other collecting agencies.

The Acting Chairperson stated that this would be the positive issue that needed to be addressed by the Department. The Committee should hear from the Department on accreditation.

Dr Masotja responded that the recommendation by the CIPC is that the Department should be the one responsible for the accreditation because they manage the regulation of the collecting agencies. 

Mr Williams noted that it would be useless to discuss most of these issues without the presence of CIPC.

Adv Alberts said that given the issues with the existing collecting societies, perhaps the Copyright Tribunal could play an oversight role on the collecting societies.

The Acting Chairperson said that this was a sound suggestion and the Tribunal should be the one playing an oversight role.

Mr Mbuyane asked about the challenges experienced by collecting societies so that the Committee was aware of these challenges when dealing with royalties.

Dr Masotja replied that there are collecting societies that are paying over their royalties but there is always backlash from some collecting societies when they try introducing regulation. The collecting societies needed assistance in terms of their members and some of the big broadcasting companies are not paying their licensing fees. There are also challenges with the management of local music as most radio stations are still playing music from foreign artists. 

The Acting Chairperson said that the Committee should try to tighten up these challenges especially to ensure that the local artists are able to benefit.

Ms Theko said that the Committee should not forget what the former Chief Operating Officer (COO) of SABC did with the introduction of 90% local music and the backlash that came after this.

The Acting Chairperson noted this comment

Clause 30 Copyright Tribunal     
The Acting Chairperson asked about the progress made by DTI about the establishment of the Copyright Tribunal.

Dr Masotja responded that the Department stated that CIPC should look into the provisions that are talking to the Intellectual Property (IP) Tribunal and see which clauses would fit into that context currently. The Department had not moved on Copyright Tribunal because it wanted this to come before the Committee before it can even move forward on this. There is a need to have low cost mechanisms to accommodate our artists in a cheaper way and this should include collaborating with other stakeholders. 

The Acting Chairperson said that it was now the responsibility of the Committee to put forward proposals on this. There was a general consensus that the powers of the commissioner should be extended. The Committee was clear that our artists must be protected. 

Clause 35: Unenforceable contractual term
Dr Alberts commented that there should be clarity on unenforceable contracts.  

The Acting Chairperson said that the work of the Committee today had been impacted by the absence of the relevant stakeholders. These stakeholders are not here to provide a full detailed response on the question of unenforceable contracts. The Committee might be provided with direct answers when meeting next week.

The Acting Chairperson noted that the Committee had completed deliberations on the DTI presentation. The Committee scheduled the DTI briefing and engagement for only an hour but this ended up taking three hours. There have been voluminous inputs and deliberations. The stakeholders needed to be present at next week’s meetings. The Committee appreciated the work done by the Department of Trade and Industry. The next item on the agenda is to deliberate on the Bill on clause-by-clause basis.

Mr Williams said that the Committee should perhaps wait until all the stakeholders are present because Members would be raising questions during the clause-by-clause deliberations on the Bill. We might be forced to repeat this process again on 5 June when we meet all the stakeholders. The Committee should wait for the full team to be present in the meeting including all the experts so that there can be responses to all the questions posed by Members.

Ms Theko supported this suggestion.

The Acting Chairperson noted there were no dissenting views from the suggestion to pause and start clause-by-clause deliberations next week.

Adv van der Merwe suggested that the Committee work on the main Bill on 5 June as there are still a lot flagged issues and they still needed to reach consensus on those.

The Acting Chairperson agreed and adjourned the meeting.

[The Committee adopted minutes of 18, 24, 25 April and 8 May 2018.]

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