Copyright Amendment Bill: DTI & CIPC response on flagged clauses

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Trade and Industry

06 June 2018
Chairperson: Ms J Fubbs (ANC)
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Meeting Summary

The Portfolio Committee met to resolve some of the outstanding policy issues in the Copyright Amendment Bill. Parliamentary Legal Services reported on information received from a Committee copyright consultant on ‘‘fair use’’ and ‘‘fair dealing’’. The consultant explained that the difference between the two was the openness of the ‘‘‘fair use’’’ system. He suggested that the Committee was probably looking for a hybrid model that gave clearly prescribed copyright exceptions in the interest of legal clarity, and included a more flexible clause, which would be called the ‘‘‘fair use’’’ clause, and which would allow for the myriad of possible uses that might come up.

The Legal Advisor informed the Committee that the Bill was precisely that. It was a hybrid model giving flexibleness, plus the ‘‘fair use’’ clause. It gave a list of exceptions and it had a specific clause that gave a list of how to determine whether the use was fair. That was the Singapore model. The difference was that Singapore’s legislation started off with a flexible provision and then gave lists for permitted users. The Bill also used the same four factors found in the Singapore legislation to determine ‘‘fair use’’, including reference to the nature, the amount, and purpose of the work and effect on the potential market for the work. The Committee had decided to work from the Singapore model and, in summary, the Bill was in line with Singapore’s legislation, except that the South African Bill refers to ‘‘fair use’’ in the exceptions section and Singapore uses the term ‘‘fair dealing’’ in the exceptions sector. The effect was the same.

The Chairperson noted that the Committee copyright workshop had given the Committee a sense of the importance of looking at ‘fair use’, but the Committee had wanted to ensure a sense of security to those who had lost out on royalties previously. The lists were to provide security. The Department of Trade and Industry informed the Committee that the Knowledge Economy was on its deathbed and the Bill was transformative and future-proof against the Fourth Industrial Revolution and would encourage research and innovation.
  
Clause 11 raised the question of whether failure to report needle time by keeping a log sheet should become an offence. This was a hotly debated clause, not about whether there should be a penalty but about what the penalty was to be. Members were angry that users did not bother to record the use of artists’ work and therefore did not pay royalties, leaving artists in penury. Members wanted the current penalty of R5 000 and three years’ imprisonment increased to five years’ imprisonment for a first offence and ten years for a second offence. It was proposed that the fine be increased to 10% of the annual turn-over of the company or entire conglomerate. Other Members tried to moderate the penalty. A Member pointed out that SABC owed R22 million in unpaid royalties.

Clause 22 dealt with commissioned work and determined that if there was no valid contract, the Bill would empower the author in a way not currently exercised by giving the author rights to a commissioned work. The Department of Arts and Culture recommended that the Committee adopt the Canadian model in which the author retained the rights to the work, even after receiving payment for a commissioned piece of work. The question of a contract was discussed at length with one Member pointing out that South Africa’s contract law was very strong and that the law recognised both a written and a verbal contract, and that the very word ‘commission’ indicated a contract. The clause therefore would only apply in extremely rare cases or where the contract was not valid.

The matter of collecting societies led to another extensive debate. There are five collecting societies in South Africa registered either as companies or as non-profit companies with the Companies and Intellectual Property Commission. The collecting societies perform a service for the industry by collecting royalties and distributing them to their members. However, one Member alleged that at least one of the societies was making an extremely healthy profit from that service. The Committee did not want a single conglomerate managing the entire industry, nor did it want an industry that had not transformed. Some Members felt very strongly that there had to be black collecting societies. The Committee discussed the possibilities for transformation in a sector that had a very limited market which had not led to the success of newly established collecting societies. It was known that international best practice was to limit the market to one collecting society per genre, precisely because of the problems of competitiveness and the difficulties that presented to those who had to pay out royalties.

The deliberations took a different tack when the Companies and Intellectual Property Commission indicated that CIPC was locked in a legal battle with one of the collecting societies for, amongst other things, forwarding royalties to artists in the United States, a country that did not have a reciprocity agreement with South Africa. The result was that royalties had not been paid to artists since 2014. That information, following on the news that the SABC owed millions in royalties, visibly shocked Members. Members were angry that the royalties for internal and external artists had not been ring fenced so that South African artists could be paid. The Chairperson also blamed Parliament for the time that it had taken to draft legislation protecting the rights of artists in all fields.
 

Meeting report

Report back by Legal Advisor
Adv Charmaine van der Merwe, Senior Parliamentary Legal Advisor, reported that she had received feedback from Prof Tobias Schonwetter, a Committee consultant, on ‘fair use’ and ‘fair dealing’. Prof Schonwetter said that the difference between the two was the openness of the ‘fair use’ system. A hybrid model, that gave clearly prescribed copyright exceptions in the interest of legal clarity, accompanied by a more flexible clause, which would be called the ‘‘fair use’’ clause, gave a better capture of the myriad of possible uses, and this was probably what the Committee was looking for.

Adv van der Merwe advised the Committee that the Bill currently did precisely that. It gave a list of exceptions and it had a specific clause, 12A, that gave a list of how to determine whether the use was fair. That was exactly what Singapore had done. Singapore legislation started off with a flexible provision and then gave lists for permitted users. However, where Singapore says, ‘‘fair dealing’’, South Africa says, ‘‘fair use’’, but the term was immaterial. It was a difference of terminology. It was a hybrid model giving flexibleness, plus the ‘‘fair use’’ clause.

Section 12 A (1)(a) on page 16 of the Copyright Amendment Bill states, “In addition to uses specifically authorised, ‘fair use’ in respect of the work or the performance of that work, for purposes or such as the following does not infringe copyright.”

Section 12A(1)(b) states that, “In determining whether an act done in relation to work constitutes ‘fair use’, all relevant factors shall be taken into account, including but not limited to
(i) the nature of the work in question;
(ii)the amount and substantiality of the part of the work affected by the act in relation to the hold of the work;
(iii) the purpose and character of the use, including whether (aa) such use serves the purpose different from that of the work affected; and (bb) it is of a commercial nature for non-profit research, library or educational purposes; and
(iv) the substitution effect of the act upon the potential market for the work in question.”   

Those four factors were the factors used in Singapore. A fifth factor was a licence for public use, but it had been repealed in Australia and was being repealed in Singapore as the public licence did not work. A technical exercise was necessary as Prof Schonwetter had provided a list of exceptions that he considered essential and Adv van der Merwe would check that all the exceptions were in the Bill. She would report back to the Committee if any exceptions had not been included in the Bill.

In summary, the Bill was in line with the Singapore legislation, except that the South African Bill referred to ‘‘fair use’’ in the exceptions section and Singapore used the term ‘‘fair dealing’’ in the exceptions sector. The effect was the same.

The Chairperson reminded the Committee that the feedback was not the opinion of Adv van der Merwe but that of the consultant.

Mr D Macpherson (DA) asked that the letter be distributed to Members as soon as possible.

The Chairperson noted that the letter had just been received and everyone would receive an electronic copy later and a hard copy the following day.

Flagged clauses in Copyright Amendment Bill: DTI response
Dr Evelyn Masotja, Deputy Director-General: Consumer and Corporate Regulation, Department of Trade and Industry (DTI) was accompanied by her DTI: Pregoria Mabaso-Muvhango, Director: Legislative Drafting, Ms Meshendri Padayachy, Deputy Director: Intellectual Property and Policy, and Mr Nkosinathi Mkhonza, Intellectual Property Officer.

Dr Masotja stated that the DTI had gone through the flagged clauses as requested and she would respond:

Clause 1
The Department of Arts and Culture (DAC) had made a proposal for a definition of ‘user’. In draft 2 of the Bill, the B Bill, the reference to ‘user’ had been removed and the word consequently only occurred twice in difference contexts and was used differently in each case. It was recommended that ‘user’ not be defined. Also, it was not international best practice to define ‘user’.

Clause 3
The clause dealt with works funded by the state. A concern had been raised by DAC that researchers were exploiting works owned by the state for commercial gain and being made available online. DAC had proposed that clear rights management be introduced. Rights management information was information that was protected by copyright and related rights. Rights management information often took place in the form of watermarks placed in protected content. The use of watermarks would assist but it was an enforcement matter and mechanisms needed to be found to utilise the watermarks effectively to avoid exploitation. It did not need to be added to the Bill.

Clause 7 – Section 7 B
The issue had not been flagged but an amendment had been made and it needed to be aligned to section 3 (1) (a). DTI proposed the removal of the words “is resident in the Republic” and to replace them with the words “a citizen of a designated country”.

Resale of Royalty Rights
“The Minister in consultation with the Minister of Arts and Culture will prescribe payable rates. That rate must be fixed, and the increase thereafter will be issued by Notice by the Minister from time to time”. The clause had to be amended to include those changes.

Clause 7 Section 7C
It was necessary to consider a method for artists to register their work so that that work could not be adapted later by a company to whom the work had been shown and that had rejected the work at the time.

There was no policy position on proof of author. If it were included in artistic works, there would be a vacuum in other works. There were affordable and easy mechanisms to provide proof of author, such as sending oneself an email. To include proof of author for all works would change the entire copyright regime. Copyright protection was automatic when copyright requirements were met, which meant the work had to be original, reduced to material and done by a qualified person.

Clause 7 Section 7 E
The issue flagged was the use of that term “indigenous community”. DTI was of the view that those phrases could be deleted as the reliance would be on the Department of Science and Technology (DST) Bill. The concern was that the Committee could not legislate on a Bill that had not yet been passed. The DTI would align with DST institutional mechanisms so that when the DST Act came into effect, they would be aligned. DTI proposed the removal of “National Trust” and the retention of “Indigenous Community”. That would be provided for in the transitional provisions.

Clause 11 Section 9A
That was the clause that raised the question of whether failure to report needle time by keeping a log sheet should become an offence. The Act indicated a fine of R5 000 for not reporting fully on needle time. DTI proposed that failure to comply with log sheets should be punishable by a fine to be determined by the Act or the Tribunal. DTI requested the Committee to consider reviewing the penalty clause, section 27 of the principal Act, which currently had a fine of R5 000 or three years’ imprisonment or both. Imprisonment might be harsh, but the fines were too low.

The Chairperson agreed with the DDG that failure to comply was a serious matter. She suggested that the DDG should pause in her presentation so that the Committee could discuss the matter.

Mr Radebe agreed that R5 000 was very little, especially considering that the SABC owed R22 million in royalties. He suggested a fine of 10% of the company’s annual turn-over, as in the National Credit Act, and a prison term for the CEO of a minimum of 10 years. The current imprisonment of three years was inadequate.

Mr G Cachalia (DA) suggested that the Committee had to go back to the reason for the penalty. It was to ensure compliance and fairness. It was not a gratuitous punitive measure. One did not want to kill the golden goose. The question was how to do it. The Bill needed to apply the carrot and the stick approach – inducement and threat. Those were civil matters, not criminal matters. The Committee could not willy-nilly decide on the 10-year prison term. Members had to determine what would be a deterrent and how to induce compliance.

The Chairperson heard what he was saying but she reminded him that the penalty was in the principal Act. If it had been a deterrent, the Committee could increase but if not, the Committee had to try something else. She asked everyone to apply their minds.

Mr Radebe stated that it was not a deterrent because the amount was too low. R5 000 was not a deterrent to the SABC. It was petty cash. The 10% would be a deterrent. The CEO and even the Chairman of the Board would know that the company would sink if there was no compliance. Committee did not decide on the actual sentence. A serial offender ended up in prison.

The Chairperson asked how much money the Committee was talking about. What would be the amount accruing to the artist on a log sheet? Would it be R10 or R100. She requested DTI to respond.

Dr Masotja asked CIPC to respond

The Chairperson noted that the Companies and Intellectual Property Commission (CIPC) was in attendance and welcomed Mr Kadi Petje, Senior Manager, Copyright and Adv Lloyd Matseembi, Legal Support: Copyright. She asked if Mr Petje had been writing examinations.

Mr Petje responded that he had written a UNISA Private Law examination. Adv Matseembi stated that he had been travelling from the Standing Committee on Copyright and Related Rights session in Geneva.

The Chairperson asked that proper apologies be submitted in future.

Mr Petje requested permission to make a contribution before he spoke of tariffs. He stated that there was a difference between the infringement of copyright and non-compliance with regulations. They should not be confused.

He stated that the tariffs were determined. Firstly, by an agreement between a producer or user and an artist but if they could not agree or there was no agreement, the Tribunal would use the fixed tariff for the sector. Regarding musical works, SAMRO had an agreement with users such as SABC. The Tribunal had not made a ruling on those tariffs.

The Chairperson thanked him for the information but directed him to her original question. If a song was played on the radio, what was the royalty on playing a recording? Was there a fixed tariff for an artist?

Mr Petje stated that it depended on the length and frequency of use. For example, a song of 2 minutes could be played 10 times. It was charged according to a set tariff, but it depended on much needle time the artist’s recording enjoyed.

The Chairperson was not happy with the response, saying that it still did not give her any idea of the amount of money that they were talking about.

Mr Cachalia agreed with the Chairperson that the response did not assist the Committee. He asked if a radio station chose to play a song, whether artists were paid differently.

Adv Matseembi said that the data required was known as spin-offs and if the charge was R100, the artist was paid according to that. The user would pay R100 times the number of times a recording was played.

Mr Cachalia said it did not answer his question. If the artist did not believe that he was getting paid sufficient for his recording, was he permitted to refuse to allow his recordings to be played?

Mr Petje explained that the needle time agreement determined that an artist had the right to claim royalties but did not have the right to prevent a user such as a radio station from playing his or her recordings. The artist did not have to give approval beforehand. In that regard it was different from other artistic endeavours. The radio station had a right to play the recording, but the artist had the right to claim royalty.

Mr Radebe said that the Committee could not have a situation where people were not treated the same. Regarding the 10% fine, the Bill had to refer to the turn-over of the entire company and not just the relevant division. People were suffering. That was the essential point. It was not about hating them when they had to go to jail and pay their money, it was about protecting the vulnerable.

Ms C Theko (ANC) said, on the proposed 10% vis- à-vis what the Committee whip had proposed, that there had to be a penalty for non-compliance, but she asked for legal advice to ensure that the Committee was on the right track. She would like legal advice.

The Chairperson supposed that the penalty clause would require advertising.

Adv van der Merwe agreed that it would require advertising. The Committee would not have to ask for permission to make the determination of a fine as section 27 was already in the Bill. She responded to Ms Theko’s request, stating that it was possible to make the penalty 10% of turn-over as had been done in the National Credit Act. It was normally used in administrative fines but there was nothing in law preventing the Committee from using that as a penalty in the Bill. It would just require an amendment of the R5 000 to 10% of turn-over.

The Chairperson asked if Members were clear on the issue of the penalties. What was the Committee’s proposal? There were two positions on the table: one was increasing the fine of R5000 plus the idea of increasing imprisonment; Mr Cachalia had said there should be no imprisonment.

Mr Cachalia said that he believed that the Committee had to look at the need for imprisonment. Looking at 10% of the annual turn-over for a division was right but 10% of a conglomerate of a group was not right. Some groups were extremely large and were diversified industrial groups. The Committee needed to look into the legality of fining the entire group. Anglo-America had both mining and newspaper portfolios so one could be looking at a really large conglomerate. To be punitive about the entire conglomerate was unreasonable. If anything, the Committee should look at the division only.

Mr S Mbuyane (ANC) supported the 10% of annual turn-over and at least five years’ imprisonment, or both. That was his position. Advertising that clause was okay. He enquired whether Section 7C also required advertising.

Mr Cachalia asked how the issue was dealt with in other comparable jurisdictions. He would appreciate if DTI could inform him of the penalty in a comparable country, and not an outlandish one, such as Venezuela.

The Chairperson agreed that it was worth looking at. Also, how did the US treat protection of needle time rights? In the US, the country jealously guarded the royalties of its artists. Could the DTI provide the information immediately?

The DDG and Ms Padayachy indicated that they needed to consult with CIPC and would respond to the Committee the following day with a policy and implementation approach.

The Chairperson asked Dr Masotja to continue with the presentation by DTI.

Clause 14
The question in section 12D related to the comparative price of a work to be able to copy it if it was not available in the Republic or at a reasonable price and public. Mr Macpherson had asked who determined a reasonable price and DTI agreed with the Committee that it was a market-related issue. DTI agreed with the Committee’s response that the market determined what a reasonable price would be.

Reciprocity
SA paid royalties to artists in other countries, but in some instances collecting societies in other countries did not pay royalties to SA artists. DTI agreed that it there was no reciprocity agreement with a country, there would be no paying royalties to that country.

Hybrid copyright model: ‘fair use’ versus ‘fair dealing’
Dr Masotja informed Members that DTI had gone back to look at some examples of the hybrid approach towards copyright, as requested by Ms Mantashe. Research showed that there was a trend of countries moving towards openness in their copyright legislation.

Most Commonwealth countries had remained with the name ‘fair dealing’ for historical reasons but had opened the provisions based on the ‘‘fair use’’ provision to allow flexibility of the law. In the past decade policy makers had called for copyright reform based on the ‘‘fair use’’ model in the USA. Several countries had adopted ‘‘fair use’’.

The Chairperson asked for a clarification.

Dr Masotja explained that it was called ‘‘fair dealing’’ but it applied the principles of ‘‘fair use’’ in its openness. Singapore had stopped using lists and just opened it up.

Ms Theko thought that the Singapore story was confusing the Members. DTI should talk to what it wanted and not bring confusion. DTI should present what the Committee had asked for and not bring in other things.

The Chairperson reminded Ms Theko that the Committee had requested the report on the Singapore approach. She was realising that ‘‘fair use’’ was more of a chameleon that changed its colour according to its environment.

Mr Cachalia thanked the DTI for the information. He had noted that the world was moving towards ‘‘fair use’’. He understood that ‘‘fair use’’ had begun in the United States in the 1970’s and that both ‘‘fair use’’ and ‘fair dealing’ were exceptions to copyright as long as it was fair to the rights owner. ‘Fair use’ was open for any purpose. ‘Fair dealing’ was narrower and based on lists. ‘Fair use’ permitted ‘fair use’ for technologies not yet created and new ‘fair users’. ‘Fair use’ was only for use that was fair. It was not a carte blanche. If the world was moving towards ‘fair use’, and the hybrid model was neither here nor there, South Africa should also be moving towards ‘fair use’. It was a contradiction to open the door to ‘fair use’ but then have a long list that limited fairness. The Committee should also look at any problems with ‘fair use’.

The Chairperson noted that the technical workshop had given the Committee a sense of the importance of looking at ‘fair use’, but the Committee wanted to ensure a sense of security to those who had lost out previously. The lists were actually to provide security.

Ms Padayachy appreciated the valuable comments, admitting that the hybrid was possibly not the best approach in that it was mixing two different approaches but added that the mixing together of the two created a workable system. South Africa was part of the Commonwealth and wanted to keep its tradition of using the ‘fair dealing’ provision, which was what all Commonwealth countries had, but there was a shift towards becoming open and flexible because of technology, the economy and the Fourth Industrial Revolution. So, it was a mix of pre-existing ‘fair dealing’ opened up with ‘fair use’. It was workable to marry the two systems.

The Bill contained a modern general exception to create an environment conducive to the development of creative works and to facilitate greater investment, research and development in the copyright industries. There was an increasing trend for countries to move towards the ‘‘fair use’’ copyright regime, e.g. Australia Hong Kong, etc. In 2006, Singapore authorised ‘fair dealing’ for any purposes, thus doing away with a list. It was an irony that Singapore’s Law carried the name ‘fair dealing’ in its title. It was mixing ‘‘fair use’’ with pre-existing ‘‘fair dealing’’ provisions to create a truly hybrid model. Singapore copyright legislation carried the heading ‘‘fair dealing’’ but tracked the ‘‘fair use’’ provision. It was similar to the Malaysian Act.

DTI had looked at South Africa’s needs and the country wanted to look at investment, research, innovation, education, technology, economic development, technology etc., and that was provided for. South Africa had included the four factors as explained by Adv van der Merwe. The Bill only had four items but expanded and modernised ‘fair dealing’ to create a hybrid to balance the system: authors versus the right to information.
The Singapore Act said: “for any purpose”. The Bill said: “for purposes such as the following”. The legal framework was open.

Ms Padayachy referred Members to page 17 of the Bill, Section 12B which opened up issues of quotations, illustrations, translation etc to modernise the ‘fair dealing’. She noted that in 1974, no one had thought of including artificial intelligence in the copyright legislation. In other words, one did not know what the next few years would require. The Knowledge Economy was on its deathbed and the Bill was transformative and future-proof against the Fourth Industrial Revolution.

Mr Cachalia thanked Ms Padayachy for clarifying matters. It was incumbent on the Committee to be forward-thinking and forward-looking and to craft fairness. The arguments seemed to be a preservation of juristic providence for no practical reasons. It complicated and conflated two essentially opposing views ‘fair use’ and ‘fair dealing’ by creating a list. Why did the Committee not grasp the metal and take the progressive, forward-looking way and leave the British heritage of ‘fair dealing’? The Committee should be radical about it.

Mr Mbuyane said that ‘fair dealing’ in South Africa had no capacity to stop things such as media platforms. It was necessary to try to accommodate both ‘fair dealing’ and ‘fair use’. All those countries including SA, were amending their copyright bills to deal with online contract registration, safe harbour, ISP, etc. If the Bill did not go with the hybrid, the state would not be able to cope with the new technologies. It was not a good idea to move directly from ‘fair dealing’ to ‘fair use’ but moving to a hybrid would be a gradual movement towards ‘fair use’.

Mr Macpherson had learnt that it was difficult to appease the many interest groups because it was not a homogenous group and was applicable to many genres. How did one create a method of protection that spoke to everyone? The hybrid had applications in different sectors of copyright and that was why the exclusions and inclusions spoke to the different categories. The categories themselves needed further interrogation. What was the DTI’s opinion of additional categories that needed to be included or excluded? Could DTI create a matrix which showed where each sector found itself on the matrix? For example, where did the visual arts stand on such a matrix?

The Chairperson agreed that it was a pertinent point.

Dr Masotja appreciated the inputs. She assured Ms Theko that DTI had come with a proposal. Proposing the Bill as it stood, was around ‘fair use’, but the list, ensured that it was not opened up too much and did not use “any purposes” as in Singapore but restricted and protected certain things. DTI was addressing the list. Regarding what Mr Macpherson had said, she responded that DTI was looking at exceptions for libraries, archives, museums and galleries; use by disabled persons; access to education using IT. Those were the three main areas. DTI might add commissioned works. Dr Masotja offered to provide a list the following day.

The Chairperson noted the reference to the terminology in the DST legislation. She asked the DAC officials to raise points, where necessary.

Ms Padayachy said that she had noted Mr Mbuyane’s comments and appraised the Committee that DTI would accede to WIPO treaties which would add to the impact of digitalisation and strengthen the exceptions in the legislation. The legislation would ensure that the rights of disabled persons could be fully recognised and exercised. She responded to Mr Macpherson. His comment well noted because the contract was often unfair and licence agreements gave fewer rights regardless of the Act. Creators would need openness. Some of the issues would be contract issues and the Committee needed to protect the vulnerable. She appreciated the fact that everyone was on the same page.

Mr Zwelakhe Mbiba, Deputy Director of Cultural Development at the Department of Arts and Culture, said that he had a contribution to make on the ‘fair use’ vs ‘fair dealing’ debate. DAC was facing a dilemma in having to deal with both content creators and managing institutions that were servicing the public who were users, and DAC tried to find the balance. The question of ‘fair use’ and ‘fair dealing’ was highly contested. DAC supported an expanded ‘fair dealing’ approach but did not want to use “such as” because they were used in the ‘fair use’ model. Any expanded ‘fair dealing’ would accommodate creators and users. When talking about ‘fair dealing’, it might end up harming education, libraries, etc. but if DAC went for the expanded version, they would be accommodated. Only 10 out of 186 members of the Berne Convention were using the ‘fair use’ model. SA had to be cautious about transplanting from the US, especially as something that was litigious. For rights users, The Committee should consider that some rights holders could not afford to spend years in court. SA should move slowly and expand ‘fair use’ over time.

The Chairperson noted that the Committee was walking slowly in the direction of using the hybrid model. It was no longer an ANC position but a Committee position. She explained to DAC that the Bill had not been in a good state when it had arrived in Parliament, so the Committee had taken on the task of writing the Bill. At a workshop on copyright the ‘fair use’ and ‘fair dealing’ approaches were presented and argued with a slight reference to a hybrid model. As far as the Committee was concerned, it was about ensuring that the rights of the originators of work in whatever genre had to be protected.

The need for the Bill had arisen because royalties were not being paid, particularly to the most vulnerable artists who formed the majority of the population, black Africans. That was what the Committee was addressing and had been shocked to find that government organisations, including the SABC which was 51% government-owned, had not been paying royalties. They were acting like some irresponsible state-owned company. Civil society was not paying, and neither was the private sector. That had guided the Committee towards looking to protect the rights of the originator.

The Committee also had to be sure that SA was not left behind in the 21st century. One the weakest points in the country was a lack of funding for research and development, and for innovation to grow the economy which would ensure protection of arts and culture in the country. The Sub-Committee had prepared the Bill for the Committee and had taken a hybrid approach. That aspect had taken so long to resolve.

Legal advisors had warned about litigations around ‘fair use’. The Committee was moving towards ‘fair dealing’.

Mr Cachalia said that he leaned towards ‘fair use’, but he accepted that the Committee had gone for the Singapore approach that was a hybrid approach. He had two concerns. Firstly, if the Committee was moving with the hybrid model, he was concerned that the Bill was looking backward as “any” had been replaced by “such as the following”. Secondly, he believed that the issue of enforcement was critical but that had to be predicated on fairness, etc. IT and copyright law were complex and currently cases often ended up in court. A list of exceptions meant that one had to be an expert on the exceptions. He pleaded that the Bill took the Singapore model if that was what was wanted, and that the Bill should not detract from that. The Committee should retain the spirit of the Singapore model.

Ms Theko felt that her position had been covered.

The Chairperson asked the DDG to continue with her presentation.

The DDG asked for Ms Mabaso-Mavhungo to present the implications of the ‘fair use’ model.

Ms Mabaso-Mavhungo noted that the implication of moving towards ‘fair use’, It would be necessary to repeal section 12 completely and introduce ‘fair use’ so that moving forward in SA, there would be no talk of ‘fair dealing’ and one would speak only of ‘fair use’. The legislative framework would talk of ‘fair use’ and not ‘fair dealing’.

Dr Masotja clarified the point made by Ms Mabaso-Mavhungo. As the Committee was talking about a hybrid model, DTI was going to amend the legislation to refer to the hybrid. That meant replacing ‘fair dealing’, so section had to be repealed in its entirety and the section rewritten, using the term ‘fair use’ but with the restrictions which made it a hybrid. It would be a hybrid model based on ‘fair use’. The principal Act currently used ‘fair dealing’.

The Chairperson understood why that that was one of the reasons why it would have to be advertised.

Ms Theko was worried about the DTI. If Ms Mabaso-Mavhungo was clarifying for the Committee and then the DDG had to assist her using different words, it was unacceptable, and she wanted the Chairperson to ask for clarification from Adv van der Merwe. They were saying different things.

Adv van der Merwe explained that the Act only used the term ‘fair dealing’ in one section and that was section 12. Section 12 had already been repealed. Currently only the memorandum spoke to ‘fair dealing’ but that would be updated. The explanation by Ms Mabaso-Mavhungo was referring to the Act, but the Bill had done that, i.e. repealed section 12.

The Chairperson checked the Act and the Bill as she thought that it had been covered in the amendments

Ms Padayachy agreed with Adv van der Merwe and stated the 12B had been modernised for SA in the 21st century in the current draft of the Bill. It was a hybrid, so it was more open and flexible. Section 12B opened up issues of quotations, illustrations, translation etc to modernise the Bill. It contained a modern general exception to create an environment conducive to the development of creative works and to facilitate greater investment, research and development in the copyright industries.

The Chairperson wanted to know if DAC had the current version of the Bill as she had copies available should they need draft 2. She believed that the explanation of ‘fair use’ was clear to the Committee.

Mr Mbiba had been working on the Bill from 14 April 2018. He had discussed the hybrid model and wanted an expanded fair deal. However, DAC did not have clarity on how the ‘fair use’ would be applied. DAC needed further discussion on the matter. SAMRO had consistently raised the question of protection, but DAC wanted to balance the interests of the creators and the users. DAC could look into the hybrid model, provided that the key stakeholders were protected.

The Chairperson referred him to section 12A on page 16 in the draft Bill and pointed out that the exceptions had been extended. She had to move forward but Mr Mbiba should raise his hand if he had questions.

Clause 22
Section 21 dealt with commissioned work and currently stated that if there was no contract governing the relationship, the person who had commissioned the work, owned the work as copyright holder to do as he wished with the work. DTI was looking at the Canadian and Dutch copyright models. During the hearings, the big companies were opposed to creators having more rights than those who had commissioned the work. DTI wanted to increase rights to author and, therefore, was recommending Canadian model to support the DAC proposal. Both Dutch copyright law and the Canadian model ensured that rights remained with the author even when someone had commissioned the work. The person who had commissioned the work received a license to use it.

Mr Cachalia pointed out that the clause referred to cases where no contract governed the relationship. It did not refer to written or verbal contracts, so both would be valid. There was no clarity on that. He wanted to understand the rationale that said that if there was no contract, written or verbal, the owner and the author should have skewed rights. He was keen to understand that.

Mr Macpherson thought that there was a need to be wary that legislation did not become a stumbling block to creativity. He was aware of the crafts being sold in the Natal Midlands. For example, if he asked a craftsman to create something in a particular way, the craftsman would then own the work even though he had commissioned it. It would dis-incentivise the public to commission pieces of work. Would he have to write a contract before he could ask someone to do some art work for him? He felt it was restrictive and that it would negatively impact on people engaged in small businesses doing craft work. It also put an enormous burden on those people to understand and engage with a contract. In the case of a commissioned piece of work that was not governed by a contract, it was very prescriptive and very damaging to small scale artists and needed more thought.

The Chairperson understood that if there was no contract, the person who commissioned the work was the copyright owner, but the originator could copy the same item and sell to someone else. She asked DTI to clarify.

The DDG replied that DTI wanted to ensure the author had a say in the completed creative work. DTI was recognising the importance of the contract. Mr Macpherson said it had not been thought through and he could be right, especially in the situation that he had described. The position in terms of policy, was that the Bill said that when you commission, you own, so DTI wanted to give more rights to the author.

Ms Padayachy referred Mr Macpherson to clause 22 which replaced section 21. 1(c) stated that ‘Where a person commissions the taking of a photograph, the painting or drawing of a portrait, the making of a gravure, making audio-visual works and the making of a recording”. It was very limited. The clause listed particular works and not craft work etc. The section would not hurt someone who was selling craft. She agreed that maybe DTI should look at removing the making of a portrait, considering that it was personal. It was the large corporations that were being exploitative that DTI wished to address. The section was to protect someone from a personal point of view.

Mr Mbiba indicated that copyright on its own did not protect the idea, but the expression of the idea, i.e. the creator. The creator was protected. The power dynamics in the cultural and creative industries had shown that those who could afford to commission, re-used the work beyond the purpose of creation, but did not reward the creator. The Canadian model would ensure that creators would be rewarded for re-use of works.

Mr Cachalia understood that it talked to the situation where no contract exists. He had asked whether it  was a verbal or written contract. In a written or a verbal contract, any additions would be included in the contract. In the absence of the contract, if he asked someone to paint a picture, that was a verbal contract, so what was ‘no contract’? When he had purchased something, which was contractual, then he had the right to do whatever he wanted to with what he had purchased. He had asked for the rationale behind the Canadian and Dutch models and would like a response. He was giving the counter-rationale.

Mr Radebe understood that personal stuff such as a portrait would no longer be covered in clause 22. He was adamant that rights to personal things such as portraits had to remain with the one who had commissioned that work. It would be wrong to commission without a contract.

The Chairperson suggested the ideal was to have a contract and the question was what it would mean if there was no contract. She understood that clause 22 was a contingency measure. She agreed that even asking someone to change constituted a contract.

Mr Mbuyane said that in the absence to a contract, section 21 (clause 22) was very clear. In the absence of a contract, why was there a need to go to any model? He had a question about the previous clause. He was not sure about clause 21. Even though the model had come from the DAC, DAC itself had requested clarity.

Ms Theko said she was becoming more and more confused. She needed more information on the issue. The DTI, DAC and the legal advisor had to do more reading on it. The Committee had to understand it better. The DTI had been requested to indicate the policy issues to the Committee. She was waiting for that as she did not want the Committee to do more harm than good.

The Chairperson reminded everyone that SA worked on Roman-Dutch law and a contract was verbal or written. Just asking someone to do something was a verbal contract. She had seen it as a rare position where there would be no contract. Commissioning, or asking someone to do something, was a contract. SA had the toughest contract law. Perhaps the drafters had meant to say if there was no written contract. She agreed with Ms Theko’s proposal and asked DTI and DAC to present something the following day, taking into account what she had said. She assured them that Dutch and Canadian law would not be applicable.

Dr Masotja had heard the resolution proposed by Ms Theko but she requested permission to read from the Bill, clause 22(1)(c) “in the absence of a valid contract, ownership would vest in the person commissioning the work and the author of the work shall have a licence to exercise any right which by virtue of this Act would otherwise be exercisable exclusively by the owner.” In other words, if there was no valid contract, the Bill would empower the author in a way not currently exercised.

Mr Petje shared some of the challenges in the sector. SABC was both a user and an owner so it could commission work and it used the work on its stations. Sometimes the work commissioned was never used but shelved. He gave an example of ‘soapies’ being commissioned. That work could not be commercialised because it was not used. However, the author could use it. In terms of SA law, if he asked a taxi driver to take him somewhere, he had a contract with that taxi driver. The word “commissioning” was a contract. As long as the Statute did not say it had to be in writing, it was valid. In section 21, those statements were deeming provisions.

The Chairperson said the word being “shelved” was useful.

Adv Matseembi explained that if one party wanted to have a monopoly over a work, there had to be a contract stating that. In the absence of such a contract, the author had a licence to use the work. It was a bargaining power. If the one who was commissioning that work and the author did not agree and did not sign a contract, the author had a licence.

The Chairperson understood that he was speaking of an automatic right.

Mr Cachalia was not sure that it would pass muster. In SA law, there was a contract when there was offer and acceptance. When offer and acceptance simultaneously existed, ownership passed to the person who had paid for something of value. In the absence of a written or verbal contract, the ownership rested with the person who had paid, no matter how one tried to deem it to be used by someone else, no matter how morally right it may seem, one would find oneself in great conflict with the law. He would like that to be tested.

The Chairperson said that she heard Mr Cachalia but the whole discussion was delaying the Committee. Challenges arose if there was no clarity. When a publisher published a book, then the originator owned the work. But if the publisher commissioned the work, did the publisher own the work? The intention was to protect the originator, but it had to be legal. She wanted the legal advisors and CIPC to interrogate the clause so that the rights of the originator were protected.

Clause 23
Section 22 in the Act referred to assignment and licensing of copyright. The intention in clause 23 was for composers and publishers to recover economic benefits from the assigned copyright works. The clause would be limited to publishers and composers for greater clarity and the life of a contract could not exceed the life of the copyright.

The Chairperson said if one had the copyright it should not be more than 25 years, so the copyright was returned to the author. The copyright agreement could be renewed. Sometimes people were desperate to get into the business and so the contract was not very favourable, but the work was highly successful. When the 25 years was up, that originator could benefit by signing a new contract.

Mr Cachalia asked for confirmation that it was limited to composers and publishers only.

The Chairperson confirmed his understanding.

Clause 24
Section 22A was about the assignments and licenses in respect of orphan works. The process of dealing with orphan works in the Bill was somewhat cumbersome but DTI was awaiting clarity on the ‘fair use’/’fair dealing’ approach. With the hybrid model, the ‘fair use’ doctrine could be used, and orphan works could then be used without permission of the author. DTI agreed that the author had to have access to the copyright work whenever that author resurfaced. Once the author was identified, the hybrid model would ensure that the author could claim all royalties immediately.

Adv van der Merwe asked for clarity. The question was whether the clause needed to remain in the Bill or whether it was covered under the hybrid model.

The Chairperson noted that the matrix of the previous day, had suggested that there might be a need to fashion a clause under the hybrid model.

DTI had proposed that the clause remained because the hybrid model would cover it, but DTI would go back and check that it worked.

The Chairperson noted that the clause was flagged as the DTI had to craft a suitable clause.

Mr Cachalia asked, in respect of clause 24 Section 22A, whether the Bill referred to royalties for the work going forward, or was it intended to be retrospective. It was not clear. Could an author only claim royalties from the point that he or she re-surfaced, going forward?

The Chairperson noted that the question to be asked was how it had become an orphan work.

Mr Cachalia suggested that it could be an estate of someone who had died.

Mr Radebe said the work might not be known, so someone might use the work because they did not know who owned the work.

The Chairperson thought that the advocate had said that one could not go back endlessly. Was it possible, legally, to make something retrospective?

Adv van der Merwe said that it was possible to make something retrospective but there was no need to make it retrospective. The clause created a mechanism for royalties of orphan work to be collected. Currently, if someone had used the work, the author would have to find out who had used it. According to the Bill, if the user enquired but found it to be an orphan work, the user would pay royalties into a collecting society which would pay out the royalties whenever they were claimed from the society by the author.

Mr Mbiba had a query about the money. If one paid royalties for an orphan work, the money would sit in the trust account for five years, but what would one do with it after five years?
Mr Mbiba said that DAC had asked what would happen after the five years and how could the money be used because it could not just sit in a trust account. DAC had proposed that after five years the money be re-distributed, and a portion be used for cultural purposes. When the person was identified, it would no longer an orphan work.

Mr Petje explained how the UK had approached orphan works. The State became the custodian and licence anyone who wished to use it. After a period of years, if the owner was not found, it went to the state. It must be remembered that there was a need for a collection mechanism.

The Chairperson asked if the Committee agreed with the five-year period.

Adv van der Merwe noted that the Bill referred to five years but any time, even after five years, that the person surfaced, he or she still had a claim on the money. It was expropriation for the state to take it. It could be used in investments in Arts and Culture, but at any time that the owner surfaces, the money had to be paid out. On what basis would those royalties be expropriated? SA differed from the UK in that it had a Constitution and it enshrined property rights.

The Chairperson thanked the advocate for reminding the Committee.

Mr Cachalia was covered by Adv van der Merwe.

Collecting societies
The DDG reviewed the list of collecting societies. There were five collecting societies in South Africa. Two collecting societies were not under the CIPC regulatory framework, namely SAMRO and CAPASSO. SAMRO administered Section 6 rights which dealt with music compositions. It was a self-regulatory agency as it was only accountable to its members or rights holders, who were composers. SAMRO had a wing called DALRO which administered authors’ rights in literary works. CAPASSO administered reproduction rights which emanated from both Section 6 and 9 rights. It was also a self-regulating agency and accountable to its members through the company legislation.

Collecting societies under CIPC regulatory framework were SAMPRA and IMPRA. Those collecting agencies administered Section 9 rights, known as needle-time rights, and were subjected to CIPC supervision. Other societies that no longer existed were SARRAL and NORM. RISA was a recording company association.

Mr Macpherson had been thinking about log sheets and collecting societies. If log sheets were not completed, the royalties would not be paid. Shopping centres in SA paid a base rent plus a % of turn-over per store. The shopping centre could see electronically via an electronic system what the turn-over was. Surely, CIPC should be able to look into a radio station’s electronic system once a month to identify who was owed royalties and what amount was owed. It would be a more effective and easier system. It could be prepared for the future. The shopping centre example could be mirrored in the music industry.

The Chairperson thanked Mr Macpherson and suggested that Members thought about it for comment the following day. How could the idea be used constructively?

Mr Mbuyane did not think that collecting societies were registered with government for any services. Some were owned and controlled by SAMRO. RISA and SAMPRA was one and the same organisation.
The Committee could not have one conglomerate managing the entire industry. No one used anything about it. The Committee could not just pass over that clause and leave those societies controlling everything.

The Chairperson agreed that she had been concerned that some were self-regulating societies which, therefore, were not registered with CIPC. When it came to the protection of artists generally, how could the Committee ensure their protection when they were self-regulating? They had private membership. Did the Committee want to allow self-regulating societies, or would there be more protection if they were regulated? Members had to consider the matter over a five to six-minute tea break.

Clause 25
Dr Masotja explained that Sections 22 A to F related to collecting societies. The focus would be on accreditation which would address governance, etc. Societies working under CIPRO were already registered and one could not register a registered company. Accreditation would force the self-regulating societies to become part of the regulatory system. There was a need to give the societies time to apply for accreditation. Accreditation was currently in the regulations and required the societies to report on financial statements, etc. It was better to be accredited rather than simply registered as the criteria for accreditation could be set. Internationally, accreditation was preferred. Currently there were three forms of accreditation in the regulations, dependent on numbers and the type of copyright and a list of criteria that collecting societies would have to meet in order to be accredited.

Another matter of concern was the fact the regulations currently provided for one collecting society per right. The Committee had considered increasing the number of collecting societies. Issues to note in that regard were the difficulties of users having to deal with multiple collecting society and that more than one society per right would mean that collecting societies competed for business and offered different royalties, which would be chaotic. Those that could not do so successfully would collapse. Internationally, the model was one collecting society per right.

Clause 27
Section 27 dealt with technological protection measures which had to be carefully considered because on the one hand they prevented abuses of copyrighted works digitally, but on the other hand, they clashed with the use of exceptions and limitations allowed in Copyright. The DTI had relooked at the clause and could say that the balance between technological protection measures and exceptions and limitations had been properly struck. DTI had relooked at the clause and was happy with the balance.

Mr Radebe agreed that the requirement of accreditation for the collecting societies was a good proposal. Did it include the decision-making body and the budget and the AGM and who was going to ensure that a proper AGM was held?

Mr Cachalia asked about international best practice to require accreditation. In which jurisdictions were those? And were collecting societies governed by law or by regulations? It was important in terms of governing and how one went forward. He preferred freedom of association where societies were governed by their members, but he would bow to international best practice. The issues of the good governance and management applied regardless of whether law or regulations controlled them. The Committee did not need to re-invent the wheel. It really was not necessary to set up another body to govern the societies.

Mr Petje informed the Committee that all collecting societies registered with CIPC had to hold an AGM and they had to invite CIPC to the AGM. CIPC could request any other documentation to ensure compliance. The Companies Act kicked in and created an additional framework for collecting societies.

With regard to accreditation and the terminology used, CIPC had copied the model used in Switzerland. There were lots of international models. He informed the Committee that there were collecting societies that were registered as a non profit company (NPC) and so one did not want to register them a second time. They were already registered with CIPC. Therefore, accreditation was good.

 Adv Matseembi added that a requirement for accreditation of collecting societies was that the members had to be represented in the highest structure of the society.

Mr Petje informed the Committee of other jurisdictions that were regulated by government. CIPC had benchmarked against Nigeria, Kenya, and France which regulated collecting societies and where there was government intervention. The same challenges had surfaced in those jurisdictions.

Mr Radebe was pleased to hear that there was representation of members on the highest structures but why had the registrar not seen the current problems? Was the Bill going to resolve the problems?

Mr Cachalia thanked CIPC for the list of countries against which SA had benchmarked. It was important to look at countries that had had stellar growth while ensuring protection of members. He asked if the collecting societies could be benchmarked against countries such as the US and UK where the societies had resulted in significant growth in the industry. SA should be following the most successful and not those that had challenges.

Mr Petje stated that from 2009 to 2014, SAMPRA had paid royalties to their members. SAMPRA was the one that CIPC regulated but CIPC did not have capacity to regulate the other societies.

The Chairperson stated that that was why the Bill was needed. CIPC did not have the legal authority to address the self-regulating societies. She was not sure why anyone collecting money was not registered.

Mr Radebe asked if SAMPRA had continued to pay royalties after 2014.

Mr Petje explained that there had been issues and they had recently submitted documentation for 2015. CIPC had determined that certain countries should not be paid royalties as there was no reciprocity. CIPC was seeking a legal opinion and hoped to resolve the matter before the end of the year.

Adv Lloyd Maseembi explained that societies not under CIPC were registered as a NPC but the CIPC did not have mandate to regulate a NPC.

The Chairperson confirmed that that meant that all collecting societies were registered with CIPC in one way or another.

Mr Mbuyane assured everyone that the societies were not really non-profit making societies. They made a lot of profit – R42 million, while the artists went hungry. So how could they be registered as NPCs? Why did CIPC not go to the police and report them for doing wrong, if CIPC could not manage them? The Bill had to strengthen CIPC so that they could do their job.

Mr Cachalia stated that he had not been addressed regarding his request about looking at examples of other geographies that had been successful with societies. SAMPRA had not paid royalties since 2014. Why not? Those societies that were not regulated had to paid tax and had to have audited statements and members had the right to vet those financial statements. If people were not getting their royalties, the members had the right to open a case against them. He noted that if SAMPRA had paid some artists and not others during that time, that would be cause for those not paid to open a case against SAMPRA.

The Chairperson noted that every society was registered in terms of the Companies Act as legal entities. But were not all accredited. A couple were accredited. So, to get a handle on things, all had to be accredited. Then there could be some form of monitoring by the state with respect to people’s funds.

Ms Padayachy said that DTI had benchmarked with Australia, Brazil, France, India, New Zealand, Norway, Senegal, UK, and Nigeria.

Mr Petje explained that from 2015 to 2017, CIPC and SAMRA had been deadlocked because CIPC had not approved their distribution plan because CIPC had a different interpretation from SAMRA on who should be paid. CIPC would not allow the society to pay royalties to foreign repertoires because there was no reciprocity. Once that had been resolved, the three years’ financial statements and royalties could be addressed because they would know how to deal with it.

The Chairperson asked how long it would take to get the legal opinion.

Dr Masotja added that he was talking to reciprocity, in particular, to the USA as discussed.

Adv Matseembi stated that it was not only to do with distribution plans. CIPC had not started to deal with SAMPRA’s 2016 and 2017 financial returns and there were other issues.

The Chairperson noted that the problem was reciprocity. What was taking CIPC so long? When would they get the legal opinion?

Mr Petje stated that CIPC had sought legal opinion and expected the opinion in the first two weeks of July.

The Chairperson stated that the Committee could not rush legal opinion, but she wanted the legal opinion for meeting of 31 July 2018.

Mr Cachalia asked why there was a three-year logjam in dealing with one society but CIPC was seeking regulations to have other collecting societies under its wing. Was it feasible that the CIPC could manage more of those societies under its wing? Had the other NPCs that were registered with CIPC distributed their royalties? Why replace the current system with something that was broken?

Mr Mbuyane asked CIPC to clarify how far they were with SAMRO.

The Chairperson requested clarity. Presumably up till 2014, international agencies and countries were paid royalties. Was it not possible to look at what was owed to people within SA and outside and ring-fence that amount owed internationally and pay local artists?

Mr Petje explained that in 2014, CIPC had ring fenced local royalties and paid out to copyright holders but CIPC had insisted that by 2015, SAMPRA had to have an acceptable distribution plan. Furthermore, SAMPRA had gone through a transformational process. The previous administrators had left, and the society had merged and had had to re-apply for registration and had additional challenges. CIPC then launched an investigation and had found some errors, etc. Lots of things had happened since 2014.

The Chairperson commented that lots had happened except payment of royalties. She was worried because an accredited agency seemed to submit whenever they liked. Other companies had one to two years to submit books, but that society had had four years. Why was the society allowed so much time before CPC checked on them? Could CIPC not deal with the one that CIPC had control of? Why could they just flag the international royalties and pay the people in the country? CIPC had to explain why it could not be done.

Dr Masotja explained that there one of the difficulties was with different collection societies trying to operate in the same space. That was why DTI had recommended one society per right. The recently formed collection society was having problems with membership because they were both looking at the same market. There also conflicting issues with the users and other dynamics that had come up with the two collecting societies in needle time that were under the control of CIPC and that had affected the issue of royalties. They had also had legal issues regarding paying. The new society was having trouble entering the market because they were competing with another society. Those were issues over and above the international issues.

Mr Petje said that CIPC had a statute and the Commission had to adhere to the regulations that were there.

The Chairperson declared that it was a huge issue and Parliament was at fault for not processing legislation sooner. Parliament had given CIPC carte blanche to do as it wished.

Mr Radebe said that DTI and CIPC had to understand that artists could not go hungry. He commended CIPC on not letting the societies pay out to countries that did not show reciprocity. Moving forward there should not be such a situation.

The Chairperson stated that the situation was worse than the Committee had imagined. She agreed with the whip. If there was no payment coming in, SA did not have to pay those countries. But the issue of those not being paid and the merger was another debacle that the legislation had to address. She was not sure why CIPC was waiting for legal opinion but there would be no payment internationally if there was no reciprocity. She lamented the fact that the societies took as much time as they liked to sort out their challenges while artists waited and waited.

Mr Mbiba agreed that the matter was worse than imaginable. When the needle time rights were enacted, the intention had been to support artists. There was a 50/50 split but there were no systems in place and no contracts were signed with artists who were performing. For example, the names of session artists were not recorded so when royalties were received, the societies did not know who was supposed to benefit and it was not easy to go back and find out who had performed in a session or as background artists.

Transferability of rights was the second big issue. The model of transferability of rights meant that the companies owned the intellectual property of the material. Sometimes local content was owned by an international company that was based in SA, but the money went out of the country. If people did not have ownership of their work, the royalties would never be paid. The Committee needed to be aware of those contractual issues and the consequences of not having ownership of the material.

The Chairperson appreciated the input, but she did not think that Members had had the slightest idea of how serious the situation was. Speeding up the legislation was not the solution. There could not be loopholes in the Bill. Overseas companies based in SA, were purchasing work from a South African and the funds were going outside the country. How could the artists get the money? There were legal minds in the meeting and they had to apply their minds. All South African artists of one kind of another had to receive their royalties. She reminded everyone that the Protection of Performers Bill was being drafted but the Copyright Bill had to propose a robust system to protect the artists. She had no idea how it was possible to resolve the problems. Maybe the legal people also understood how difficult the issue was. There was a need to align the Bill to the Investment Act and many other pieces of legislation. The Committee could not engage further on that aspect but would come back to it.

Clause 33
DAC had proposed that to assist indigent artists, the services of legal aid should be used. DTI explained that that could be done outside of the Bill. DAC could still build an assistance program linking indigent people with the Legal Aid Clinic and Legal Aid could provide representation in copyright disputes. That was an enforcement matter and did not need to be part of the Bill.

Adv van der Merwe informed the Committee that the Legal Aid Act excluded giving assistance in civil matters in an administrative court. The Committee could speak to the Department of Justice and Constitutional Development or the Portfolio Committee on Justice to find out why it had been excluded, but it could not be put into the Bill because it would cause the Bill to be unconstitutional.

The Chairperson indicated that she would ask the Ministers of Trade and Industry and Justice to discuss Legal Aid.

Mr Mbiba stated that DAC had also found that Legal Aid could not assist and so DAC had funded the artists’ case of Solomon Linda against Disney and the case of Miriam Makeba. The Tribunal had also been powerless to manage the situation.

The Chairperson stated that the Bill should strengthen the powers of the Tribunal to hear cases and to issue fines. The Committee had recently followed that path in the National Credit Bill.

Dr Masotja agreed with the reason for strengthening the Tribunal.

Ms Theko said that she agreed that the Tribunal should be strengthened because its judgement could be the equivalent to the high court.

The Chairperson reminded the Committee that Members had already agreed to address the issue of the Tribunal the following day.

Clause 35
Section 39B dealt with unenforceable contracts. The clause protected a vulnerable party who had contracted him or herself out of the rights afforded by the Act. However, paragraph (b) and (c) allowed a settlement agreement and a service license which could exclude the protection of the Act. The spirit of the clause was in subsection 1 which was about protecting the vulnerable and ensuring that they could not contract out of their rights. For that reason, DTI proposed the deletion of paragraph (b) and (c) of subsection 2 so that there was no way in which a vulnerable person could be deprived of his or her rights.

The Chairperson agreed as the Committee’s intention was to protect the vulnerable. Was the Committee satisfied?

There were no objections.

Other issues
Dr Masotja explained that she was not dealing with the Transitional measures clause as there were other issues still to be addressed in that clause.
Section 19 C related to galleries and DTI recommended that the reference to galleries be retained as in the current Act.
Section 12 related to the private copy levy. DAC had raised a concern that there could abuse of the proposed levy. DTI did not have a policy position on it but including the levy would turn it into a Money Bill, so DTI did not recommend the levy at that stage.

The Chairperson agreed that the Committee would not consider a Money Bill, but the point should be raised, and policy had to be considered.

Dr Masotja raised some additional issues. They had not legislated for local content, but she assumed that that matter was for the Department of Communications (DoC) to consider. DTI needed to engage with DoC around local content which should be played more frequently.

The Chairperson agreed but suggested that it could be done via regulations. There were a number of departments that would have an interest in that matter.

Dr Masotja added that there were other artists that did not have collecting societies, such as visual art. Artists had asked for collecting management for areas other than music. She was flagging that for the Committee to consider.

The Chairperson said the Committee would like to have an agency that would collect for artists etc. It had been raised in the public hearings.

Adv van der Merwe informed the Committee that the Bill did not stop the development of any additional collecting societies for other types of artists. She would double-check whether the Bill limited the type of collecting societies that it covered and would speak to the Committee about that.

The Chairperson asked the advocate to address the Committee on that matter on the following day.

Dr Masotja indicated that it was necessary to look at the maximum period for retaining royalties. The Bill needed to stipulate how long they should be retained.

The Chairperson stated that could be incorporated with other collecting society issues.

Dr Masotja pointed out that research had shown no clear evidence that ‘fair use’ had a negative impact on countries. The contracts were the main issue that had clouded copyright issues and abuses.

The Chairperson asked the DDG looked at collecting societies and the matter of interest.

Mr Mbuyane reminded the Committee that the question of interest had to be addressed because artists should be paid interest and that royalties be paid annually.

Closing remarks
The Chairperson declared that the Tribunal issue would be dealt with on Thursday together with collecting societies. In addition to the Tribunal, the Committee had given the DTI several other items, including the collecting societies. She needed guidance as to what DTI could do for the morrow.

The DDG said she would be prepared to present the following day.

The Chairperson required CIPC to be at the meeting. CIPC played a critical role and was adding value. She also asked DAC to be available.

The meeting was adjourned
 

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